Ebt Mobile China Share Discussion Threads

[siwel100] 03/8/2007 07:18

sheeneqa....10% off revenue sounds like a heck of a chunk just because a few models are delayed.
New models are important to mature markets where saturation has been achieved and replacement with new models is crucial. But China is a far from a mature market....so the reasoning seems a bit odd.
I suppose it could be argued that EBT is operating from quality locations where most customers already have a mobile therefore they are in the "mature" end of the Chinese market, but even so I would have expected the growth from multiple units per family (dad has one but they buy another for the wife and again for the child), to be a sales driver far more important than a few new models.....its all very odd.
Have kept it on the watchlist but a tad more sceptical about when they will reach breakeven and become self funding.The obvious concern is that rental charges for their "quality" locations are going to outpace their ability to drive sales/margins. Todays news makes that look much more of a danger.

[sheeneqa] 03/8/2007 07:06

Profit warning!

Ebt Mobile China Trading Statement


RNS Number:4711B
EBT Mobile China PLC
03 August 2007



For immediate release 3 August 2007

EBT Mobile China plc
("EBT Mobile" or the "Company")

Trading Update

EBT Mobile, a leading China-based retail chain selling mobile phones and related
products and services, announces an update on its trading performance.

Compared to its competitors, EBT Mobile's business has performed well in what is
the largest mobile phone market in the world. Substantial progress has been made
since the start of the year. The number of stores has grown from 190 to 238 in
the first half of 2007, and at the end of June EBT opened the first of its 7 new
stores within hypermarkets operated by Tesco Hymall, Tesco plc's vehicle for
expansion into China. Relationships with key handset manufacturers, major
retailers and China Mobile remain strong, reflecting EBT's core partnership
strategy of "Win with Winners" (3W), which remains unchanged.

The number of new stores to be opened by the end of 2007 remains broadly on
target but the timing for opening some new stores in the second half is expected
to be delayed because of partner-oriented issues which are not related to EBT's
performance. In addition, the current lack of new handset model releases by some
major manufacturers into the Chinese market is impacting average unit prices and
margins. As a result, management currently expects revenues to be circa 10%
below market expectations for the year ended 31 December 2007 and that the
Company will make a modest loss for the full year. Further information of the
Company's progress will be provided when EBT Mobile reports its interim results
on 22 August 2007.

[siwel100] 01/8/2007 16:58

explorer/igoe104....Treating growing discounts on increased volume as bunce (although as in this country their leverage will become increasing powerful over time), do you have any feel for the number of stores/outlets required to achieve breakeven and then for 1m profit which should be putting it into self generating territory?
Also any idea of their projected no. of possible suitable locations . I appreciate this will grow pretty rapidly in line with Chinese economic growth, urbanisation and the growing middle class. Just trying to get a feel for potential 2/3 years down the line.

[igoe104] 01/8/2007 12:47

you,ve still got them tesco stores to add soon, so that number will be ramped up.

[explorer88] 01/8/2007 12:19

igoe - you're on the ball as usual, well done!

it's good to see internal promotions, especially as he's been with the business for 7 years, will be familiar with operations, and will be able to take up the batton and run straight away.

(interesting that they had 238 stores at end June, a little less than i thought they would - i've been estimating 245-250 by end June)

[igoe104] 01/8/2007 12:12

LATEST NEWS.

EBT Mobile, a leading China-based retail chain selling mobile phones and related products and services, is pleased to announce the appointment of Mr. Wei Wang as Chief Operating Officer and Executive Vice President, with immediate effect. For the purposes of clarity this is not a Board level appointment.

Wei Wang, aged 39, joined the Company in 2000 as Chief Technology Officer and since 2004 has also served as Vice President of Purchasing. Mr. Wang has taken the lead role in successfully managing the China Mobile service hall project and was instrumental in EBT winning best direct purchasing partner awards both Nokia and Motorola in 2007.

Prior to joining EBT, Mr. Wang was responsible for developing and implementing a management information system for CRC Shop, a major supermarket chain in Hong Kong and China. Mr. Wang holds a Bachelor of Computer Science degree from Yan Shan University and a Certificate in Finance from the Graduate Program of Finance at East China Normal University.

Zhang Ge, CEO of EBT Mobile, said: "We are delighted to appoint Wei Wang to the role of Chief Operating Officer. His contribution to EBT has been invaluable and he brings a wealth of knowledge and significant experience to the role. His operational management expertise in the retail sector has strengthened our business and we look forward to working with him in his new role."

For more information contact: Terry Garrett / Stephanie Badjonat / John Moriarty
Weber Shandwick Financial 020 7067 0700


About EBT Mobile China plc EBT Mobile China plc is a leading Chinese mobile phone and wireless services retail chain selling mobile phones, airtime, and other wireless products and services. Headquartered in Shanghai, EBT Mobile had 238 stores in 26 cities, including Shanghai, Suzhou, Nanjing, Hangzhou, Ningbo and Wuhan as at 31 June 2007. Its mission is to become the leading "end to end" multi-platform retailer of wireless products and services in China, the world's largest market for mobile phones and wireless applications and content. Working with leading industry partners such as China Mobile, Nokia, Motorola, Carrefour, Tesco Hymall, Metro, Auchan and Lotus, EBT Mobile focuses on superior product offerings, convenience and

[siwel100] 01/8/2007 11:22

Silverthread....Stale institutions averaging isnt what I had in mind. A 3 year chart with declining highs doesnt inspire me with confidence that the current Institutional holders are there with a bigger plan than try to shift chunks when they can see a profit and volume to trade.....New blood would indicate that a fresh sliderule has been cast over the business and they like what they see.
But at the end of the day we all have opinions but they are never more than just that. Personally I think it does have good potential for a long term investment once they move to profit and become self financing regarding the required expansion.
If you stand back and think about it, they have hundreds of retail units in a dynamically expanding market with mobile phone usuage jumping from 150m to 500m since they have been trading, but they havent yet broken even let alone turned the profit of a local corner shop.
Nothing wrong with that considering what they are trying to build but the current valuation has a huge amount of expectation built into it already, difficult to see it "taking off" more a gradual climb once they can leave the fund raisings behind them......hence my interest in 12 months or so.

ps...I wouldnt treat all that 60% as "Institutional" holding, Cantors had no problems picking up 6% as a short term hedge against some of their clients trading.....its not as illiquid as you may think.

[silverthread] 01/8/2007 07:57

Siwel100,

"Worth putting on my watchlist though for if/when the Institutions start to get interested"

As has been aired alot earlier this year on this thread, institutions currently hold over 60% of EBT. A further 31% are held by the Chairman and CEO. So there are less than 10% of shares in 'free issue'.

Audley in particular has been building its stake significantly and now holds 20% of EBT. Allianz also holds just under 20%.

All these figures are to the best of my knowledge and recollection.

Institutions are already heavily backing EBT.

[siwel100] 01/8/2007 02:03

Explorer88....Had a good read and understand what they are trying to do a little better. It does look like a quality company with a clear focus that should eventually deliver the rewards.
They may be approaching critical mass but are still suffering from the low income per unit in China. Simple maths suggest that with little room currently for added value they are going to need a further substantial increase in the number of retail units just to reach a 1m profit which would still leave them on a forward p/e of 50+.
As they expand further and are able to negotiate increasingly better deals then margins will obviously improve. As should the benefit to them of an increasingly knowledgable market perhaps more willing to buy more premium products from a reputable supplier.
But at this point with probably more cash calls to fund the required expansion, it does look a tad expensive, it needs to maintain that steady move to profitability and then self funding growth with zero hiccups.
First mover advantage for the creation of a pan china retail brand will be worth a lot so hopefully they should maintain the current premium on their share price
I dont fancy it as a trade but maybe in 12 months time if they keep up their steady progress it will make a good long term investment. Worth putting on my watchlist though for if/when the Institutions start to get interested.... Thanks for pointing it out

As to the Directors selling, if its ended then in 12 months time it will be ancient history.

ps...I cant see where any bid would come from at the moment. To the Chinese telecoms its only a very minor channel fraught with management issues for small returns. Foriegn retailers wouldnt touch the logistics/management issues, and a domestic buyer simply wouldnt generate any value for shareholders.........Basically a lot of money for a lot of retail sites to manage and no profit.........But that would likely change in the years ahead as they build the brand/income.

[explorer88] 31/7/2007 23:40

siwel - you're probably right to be cautious about directors selling.

[siwel100] 31/7/2007 22:05

Any reason why the Chairman and a Director started selling stock? I can usually understand one Director selling as it may be for personal reasons but when a number of them start unloading it always make me extremely cautious.

[explorer88] 30/7/2007 10:15

Morning Igoe

Talk of China Mobile buying EMI. Music and video downloads etc. I agree with you that EBT has substantial potential - let's hope that they can stay independent and grow. Nothing worse than having to settle for 40% takeover premium in a company which could rise say 1000% over several years.

[igoe104] 29/7/2007 08:38

EVERYTHING POINTS TO GOOD GROWTH FOR THE FUTURE.

[igoe104] 27/7/2007 09:48

CHINESE MOBILE SURGE.



with ebt your in the right market, to take advantage of this surge in the chinese mobile market.

[explorer88] 26/7/2007 22:49

M - that's right, prospective maiden PE deal. I'll see if i can track down that quote from JT tomorrow.

[beaufort1] 26/7/2007 21:42

Yes that's right Masurenguy.

Audley are a hedge fund for high networth individuals. Minimum investment $5m. They have about $500m under management. Apart from EBT they have large stakes in CBM, Loknstore, UK Coal, Sierra Leone Diamonds and Sylvania Resources.

EBT may well be small enough for them to take private.

THey are not buying on behalf of anyone else. I expect they will continue to increase their stake.

[beaufort1] 26/7/2007 21:42

Yes that's right Masurenguy.

Audley are a hedge fund for high networth individuals. Minimum investment $5m. They have about $500m under management. Apart from EBT they have large stakes in CBM, Loknstore, UK Coal, Sierra Leone Diamonds and Sylvania Resources.

EBT may well be small enough for them to take private.

THey are not buying on behalf of anyone else. I expect they will continue to increase their stake.

[masurenguy] 26/7/2007 21:15

Interesting and potentially credible viewpoint explorer88. However Audley has not done any PE deals yet so if they were stake building with a view to making an offer then it would be their maiden PE deal.

[explorer88] 26/7/2007 20:47

hi BB - when JT established Audley he said he was looking at taking companies private (i'll see if i can dig out the quote). They certainly have the financial firepower and acumen to bid for EBT (with a view to selling it on to someone like Carphone Warehouse in 2-3 years time)

With that in mind, i doubt whether they're building their stake for someone else - i think JT and friends are focused on their own interests.

[britishbear] 26/7/2007 20:17

We need more information on Audley - they may be buying on behalf of someone like Carphone Warehouse or VOD.

Google provides only poor information from a quick skim of the results.

Why are they building this stake - that is the question.

[explorer88] 26/7/2007 15:23

audley's stake up to 20% now - good call everyone (give yourselves a pat on the back for being on the ball)

given their background, can anyone see any reasons why Audley would want to continue increasing their stake other than as a pre-cursor to a bid for the business?

My money's on a bid at around 35p.

If i was in their position i'd make a bid sooner rather than later - before it becomes apparent that margins are improving (as previously indicated) and turnover is really starting to motor.

[beaufort1] 26/7/2007 14:14

I thought it must be Audley buying again.
You have to hand it to those guys - they buy 2m shares and the share price doesn't event twitch.

?Maybe more buying from James Reiman

[azalea] 26/7/2007 14:07

Audley ups its stake to 20%!

[explorer88] 26/7/2007 09:34

silver - i agree, last year has seen a "dearth of new handsets" - this is now changing and EBT will benefit.