Fetion IT Service Provider Aims for RMB 502 Mln IPO
Caijing, 9/14/09
Beijing Ultrapower, IT service provider for China Mobile's (NYSE: CHL; 0941.HK) Fetion mobile instant messaging service, has applied for an Shenzhen growth enterprise board IPO to be reviewed on September 17. The company plans to issue 31.6 mln shares, raising RMB 502 mln in funds.
According to the company's prospectus revealed on September 13, Ultrapower's main business is providing complete IT operations and maintenance (O&M) management solutions to domestic large and medium sized firms and government entities in the telecom, financial, and energy industries. As the outsourced service provider for China Mobile's Fetion operations, Ultrapower's main income is from the Fetion business.
In 2007 Ultrapower earned net profits of RMB 88.36 mln, with RMB 37.31 mln (42.24%) derived from the Fetion business. For 2008, Ultrapower earned net profits of RMB 120 mln, with RMB 90.97 mln (75.47%) derived from the Fetion business. For H1 2009, the company earned RMB 117 mln in net profit, with RMB 89.28 mln (76.30%) in profits originating from the Fetion business.
According to the company's prospectus, funds from the IPO will be used mainly toward large scale rebuilding and upgrading of the Fetion platform, for which the company plans to invest RMB 168 mln, or 33.51% of total funding from the IPO. However, due to the company's heavy reliance on the Fetion business, were Fetion's operations to falter or China Mobile to terminate or revalue Ultrapower's contract, Ultrapower's profitability would be seriously impacted.
Ultrapower's business is also heavily dependent on the overall state of the telecom industry. The percentage of Ultrapower's operating revenue derived from the telecom industry was 71.10% in 2006, 82.99% in 2007, 81.51% in 2008, and 92.02% in H1 2009.
Keywords: Ultrapower China Mobile 2007 2008 H1 2009 IPO profit revenue wireless instant messaging Fetion CHL Shenzhen 0941.HK SP GEB IT services mobile IM
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