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China Digital TV Holdings (STV)
Posted By: ImlongSTV
Date: 10/10/07 at 9:06 a.m. EST
China Digital TV Gets High Ratings From Investors
Shu-Ching Jean Chen, 10.10.07, 6:16 AM ETChina Digital TV Holding, a privately run digital television equipment maker, has become the latest darling of Wall Street, as its stock has more than tripled in just three trading days since its debut on New York Stock Exchange last Friday.
China Digital TV (nyse: STV - news - people ), rebranded from its former identity as Beijing Novel-Tongfang Digital TV Technology, was a clear favorite of investors right from the beginning, when its shares soared by 75% from an initial IPO price of $16. On Tuesday, it closed at a spectacular $51.08.
The enthusiastic reception is certainly welcome news for its principal founders, Chairman Zengxiang Lu and CEO Jianhua Zhu. Lu has already expressed astonishment at the larger than originally expected demand for its IPO shares, which allowed it to raise $192 million, significantly more than the target of $150 million.
Lu and Zhu cut their teeth in China’s fledgling digital television industry at N-T Information Engineering, a developer of so-called conditional access systems. China Digital TV’s purchase of CA systems, which include smart cards, and software for television network operators and TV set-top boxes, from N-T Information Engineering in 2004 provided the technological and business foundation for the company.
That year was also a watershed in China Digital TV’s fortunes, its last loss-making year. It reported $12 million in net income for the first half of this year, up from $3.4 million the similar period a year ago.
Both founders have an equal direct stake in China Digital TV, at 10.3% post-IPO. In addition, each retains an indirect interest through a shell company, China Capital.
They embody the early generation of Chinese engineering professionals in digital television, the development of which is a centerpiece in Beijing’s efforts to upgrade its broadband communications network. For the government, this serves a dual purpose: it adds a critical dimension to the country’s pipeline infrastructure to speed up its adoption of information technology; at the same time, it gives the authorities a new tool to maintain a firm digital grip on the electronic exchange of news and other politically sensitive material.
China Digital TV is clearly positioned to benefit from a policy that is still in its formative stages. It is the market leader with about 44% in the smart cards for use in CA systems. More business could come its way before China’s state-owned television network operators, which still operate on a localized basis but have recently been allowed to cooperate or expand across regions, complete their switchover from analog to digital form of signal transmission, prior to the official deadline of 2015.
But, as any savvy investor in China can testify, China Digital TV’s first-mover advantage could turn into a setback if the country’s fickle regulatory regime changes course dramatically or if market conditions fail to develop as anticipated.
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- China Digital TV Holdings (STV)
ImlongSTV -- 10/10/07 at 9:06 a.m. EST- Re: China Digital TV Holdings (STV)
China 2008 -- 12/18/07 at 9:34 p.m. EST
- Re: China Digital TV Holdings (STV)
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