IT HAS BEEN more than three months since Sinotel Technologies made the first move to enable its shares to be traded as American Depositary Receipts (ADRs) in the US.
The eventual trading of the ADRs is widely seen as having a positive impact on the stock price of Sinotel on the Singapore Exchange on buying interest by US fund managers, many of whom are not allowed by their fund mandates to buy foreign-listed stocks directly.
Sinotel, which provides wireless solutions, appears to be an attractive business riding on the 3G network rollout in China, and trades at a substantial discount to its listed peers on Nasdaq and Hong Kong.
Over the weekend, confirming the business boom, it reported its Q3 results:
* Net profit leapt 52% to RMB41.8 million.
* Revenue jumped 57.9% to RMB136.2 million.
* Net profit margin was 30.7% (3Q08: 31.8%).
As Ben Ng, its VP of corporate communications and investor relations, told NextInsight recently: “The key development this year is the 3G network rollout in China. It is unprecedented in scale and size.
"A lot of people cannot understand how big it is. It means physically going into every building in China and installing a new set of system. The subways, highways, all the transportation networks and hubs, everything needs to be upgraded.”
To widen its investor base, Sinotel had embarked on listing its shares as ADRs in the US, but the journey is not short. Sinotel (www.sinotel.com.sg) has covered much ground – but many an investor cannot wait for the journey to be completed.
As the duration and steps are unfamiliar to most investors, NextInsight recently caught up with Ben Ng (
Going forward .....
Q What is an ADR?
An ADR represents ownership in the shares of a non-US company and trades in the US financial markets. The stock of many non-US companies trade on the US stock exchanges through the use of ADRs. ADRs can represent a fraction of a share, a single share, or multiple shares of a foreign stock.
Q What about Sinotel ADRs?
For each Sinotel ADR that a US investor wishes to purchase, an equivalent of 20 Sinotel ordinary shares will be delivered to the investor by buying from the open market of the Singapore Stock Exchange. No new shares have been issued in the current exercise.
Q Why would US investors buy ADRs?
ADRs enable them to buy shares in foreign companies without undertaking cross-border transactions. ADRs carry prices in US dollars, pay dividends in US dollars, and can be traded like the shares of US-based companies.