Coolpad looks overseas to expand smartphone sales

The mainland brand aims to provide customised models for network operators in overseas markets, after posting 94pc first-half profit rise

PUBLISHED : Thursday, 21 August, 2014, 1:22pm
UPDATED : Friday, 22 August, 2014, 12:47am

Coolpad, one of the mainland's leading smartphone brands, plans an aggressive expansion into overseas markets and greater online sales as domestic competition intensifies in the second half of this year.

In a filing with the Hong Kong stock exchange late on Wednesday, chairman and chief executive Guo Deying said Coolpad would sharpen its focus on providing customised smartphones for mobile network operators in Asia, North America, Europe and other markets.

"The group will launch more new 4G models to the market in the second half of 2014, which cover from the high-end to mid- and low-end," Guo said.

Shenzhen-based Coolpad posted a 94 per cent increase in first-half net profit to HK$412.86 million, up from HK$212.44 million a year earlier, on higher gross margins and brisk 4G smartphone sales.

The group will launch more new 4G models … in the second half of 2014

Revenue grew 55 per cent to HK$14.93 billion from HK$9.65 billion in the same period last year. Sales of 3G smartphones made up 63.2 per cent of total revenue, while 4G smartphones contributed 35.9 per cent.

"Coolpad's interim results are in line with market expectations," Ricky Lai, a research analyst at Guotai Junan International, said yesterday. "We expect the company to increase revenue contribution from international sales in the second half, while it continues to expand on the mainland."

Data from Strategy Analytics showed that Coolpad was the world's seventh-largest supplier of smartphones in the second quarter of the year, with shipments of 13 million units and global market share of 4.4 per cent.

Technology research firm IDC forecast total smartphone shipments on the mainland to reach 436 million units this year, up from 351 million last year.

IDC ranked Coolpad as the third-leading smartphone brand on the mainland in the second quarter, with an 11.5 per cent market share. That was behind the 12.5 per cent share of domestic leader Lenovo and Xiaomi, with 12.4 per cent.

Coolpad, formerly known as China Wireless Technologies, obtained new financing in April worth as much as US$175 million through a syndicate of mostly Taiwanese banks.

Lai said the borrowings would support Coolpad's development and launch this year of new 4G smartphone models, with some priced at about 1,000 yuan each, as China Mobile, China Unicom and China Telecom rolled out 4G mobile services to more mainland cities.

"As Coolpad raises production of 4G smartphones, we expect its inventory of 3G smartphones will increasingly be shifted to the mainland's newly licensed mobile virtual network operators," Lai said.

The new private sector-owned operators offer their 3G services in specific locations under their brand names, while leasing network capacity from one or all three of the mainland's nationwide network operators.

Coolpad also intends to boost the number of smartphones that it sells through various e-commerce channels, including long-standing online partner JD.com

Guo said he expected its multichannel strategy would help "enlarge the user numbers of Coolpad".

CCB International said in a report that Coolpad was on track to ship 60 million smartphones this year, 67 per cent of which would be 4G models. It forecast Coolpad's total revenue this year would reach HK$38.43 billion, up from HK$19.62 billion last year.

Guo said Coolpad would also introduce new accessories to the market, including a next-generation smartwatch and an Android operating system-based set-top box for internet-linked televisions.