China GrenTech Corporation Limited (GrenTech) listed on Nasdaq on March 30, 2006. The company, which is based in Shenzhen, China, is a leading provider of wireless coverage products and services to telecommunication operators in China. The company is also a leading developer of radio frequency (RF) technology in China. GrenTech uses RF technology to design and manufacture wireless coverage products, which enables telecommunication operators to expand the reach of their wireless communication networks to indoor area and outdoor area, such as buildings, highways, railways, tunnels and remote regions. GrenTech's wireless coverage services include design, development, installation, and project warranty services. GrenTech tailors the design and configuration of its wireless coverage products to the specific requirements of its customers. The company also develops and produces a portion of RF parts and components to be sold to major base station manufactures. GrenTech is now a RF products supplier to seven large-scale base station equipment manufacturers in China and overseas.
More recently, GrenTech announced financial results for the third quarter of 2007. Although its profit margin declined due to an increasing portion of lower-margin RF product sales and a decrease in wireless coverage product unit pricing, its revenue and earnings exceeded market consensus. Its revenue stream was more diversified because of the growing demand for RF products. GrenTech is still well positioned to leverage the great opportunities of Chinese wireless coverage market in the future. However, the delayed deployment of 3G in China has led to reduced capital spending by Chinese telecom operators. As a result, we are maintaining our Hold recommendation for GrenTech.