Business Description

Comba Telecom Systems Holdings Limited is a Cayman Islands-incorporated telecommunications equipment provider. The company operates through its subsidiaries and focuses on offering network infrastructure solutions and services to telecom operators globally. Its primary business segments include the production and distribution of telecom equipment, network optimization services, and the development of telecommunication technologies. The company has a global footprint with notable exposure in international and domestic markets.

Comba Telecom operates in a competitive telecommunications industry where it faces competition from global players specializing in telecom infrastructure. The company’s market share has been under pressure due to delayed network capital projects by global telecom operators.

Revenue Streams

The company’s revenue is derived from the sale of telecom equipment and services, with a customer base comprising telecom operators, enterprises, and specialized network projects. A decline in turnover for FY2024 was attributed to delayed capital network projects by telecom operators globally, which negatively impacted the company’s gross profit.

Financial Performance Analysis

Net Profit Decline

The company reported a significant net loss of not more than HK\$600 million for the financial year ended 31 December 2024, compared to a net profit of approximately HK\$6.7 million in FY2023 [[1]].

Factors Contributing to Loss

• A decline in turnover and gross profit due to global telecom operators delaying the construction of network capital projects [[1]].
• Inventory write-offs incurred during FY2024 [[2]].
• A financial impact of approximately HK\$160 million due to the termination of the proposed spin-off and A-share listing of its subsidiary, Comba Network Systems Company Limited [[2]].

Dividend Information

No dividend was proposed or declared for FY2024 based on the information provided in the announcement.

Strategic Actions to Improve Profitability

Despite the financial challenges, the company has taken steps to rationalize costs and improve operational efficiency. These include:

• Optimizing the organizational structure.
• Adjusting the management team and downsizing the workforce [[2]].
• Focusing on the development and launch of new products and businesses.
• Securing significant increases in international orders with a recovery in domestic orders [[2]].

Recommendation for Investors

If You Are Currently Holding the Stock

Investors holding the stock are advised to exercise caution and closely monitor the company’s upcoming FY2024 annual results, expected in late March 2025. While the company is taking steps to improve profitability, the significant net loss and risks associated with delayed telecom projects remain concerning. Consider holding the stock only if you have a high-risk tolerance and long-term investment horizon.

If You Are Not Currently Holding the Stock

Investors not holding the stock are recommended to avoid initiating a position at this time. The company faces substantial headwinds, including delayed telecom operator projects, inventory write-offs, and the financial impact of its terminated spin-off. Wait for clearer signs of recovery in profitability and operational efficiency before considering an investment.

Key Findings

• Significant net loss of up to HK\$600 million reported for FY2024 [[1]].
• Termination of the proposed spin-off resulted in a financial impact of approximately HK\$160 million [[3]].
• No dividend declared for FY2024.
• Cost rationalization efforts and increased international orders indicate proactive measures for recovery.