Comba Telecom drew a disappointing HKD202m net loss

No thanks to stiffer operator capex controls.

According to Maybank Kim Eng, Comba reported a net loss of HKD202m for FY12 compared with a net profit of HKD659m for FY11. 

Here's more:

Management explained that the net loss was due to the tighter operator capex controls and the exceptional expense of HKD146m being the 2H12 inventory write-off.

Given that the operators are looking for cost-effective solutions for network rollout and optimization, Comba is changing its strategy to focus on cost
effective network products which enhance capacity and extend coverage of the operators' wireless networks.

Revenue from PRC telcos accounted for 82% of total revenues in FY12 and only China Mobile is raising its capex for 4G network development in FY13F so we believe the tougher capex environment to continue in FY13F-15F.

Nevertheless, we believe management will still improve earnings with effective cost controls. We keep our HOLD rating unchanged with a new target price of HKD3.00, based on 11x FY14F PER, inline with peers' average.