China Digital TV Holding Co., Ltd. (OTC:STVVY) Looks Like a Buy

China Digital TV Holding Co., Ltd. (OTC:STVVY) Looks Like a Buy

China Digital TV Holding Co., Ltd. (OTC: STVVY) (“China Digital TV” or the “Company”), a leading provider of cloud platforms, with gaming and other applications embedded, to PRC digital television and telecommunication network operators, today announced its unaudited financial results for the first six months of ended June 30, 2018.

Mr. Jianhua Zhu, China Digital TV’s chief executive officer commented, “We experienced solid progress in the first half of 2018 as both our registered and covered user counts maintained growth, primarily driven by our expansion of our geographic footprint to Hebei Telecom and Ningxia Telecom.  In 2018, we focus on Cloud Virtual Reality (“VR”) technology and in first half of 2018, we cooperated with Fujian Mobile in Fujian province to provide a full range of VR solutions in VR lives, games, education etc.  We remain committed to driving further growth of our business and creating value for our shareholders going forward.”

First Half 2018 Results[1]

China Digital TV’s net revenues decreased by 22.9% to US$1.5 million for the six months ended June 30, 2018 from US$1.9 million for the same period of the prior year. The decrease in net revenues was primarily attributable to the decreased product revenues during the first half of 2018.

Cost of revenues decreased by 56.9% to US$0.4 million for the six months ended June 30, 2018 from US$0.9 million for the same period of the prior year. The decrease in cost of revenues was primarily due to the decreased product revenues in the first half of 2018.

During the six months ended June 30, 2018, gross profit increased by 4.4% to US$1.1 million from US$1.07 million for the same period of the prior year. Gross margin, which is equal to gross profit divided by net revenues, was 75.1% in the first half of 2018, compared to 55.5% for the same period of the prior year. The increase in gross margin was mainly due to a decreased proportion of revenue from products during the first half of 2018, which have a relative lower gross margin than services.

Operating expenses in the first half of 2018 decreased by 25.2% to US$3.4 million from US$4.6 million for the same period of the prior  year.

  • Research and development expenses in the first half of 2018 decreased by 23.1% to US$1.5 million from US$1.9 million for the same period of the prior year. The decline was mainly due to decreases in personnel related expenses and share-based compensation.
  • Selling and marketing expenses in the first half of 2018 remained relatively stable at US$1 million as compared to the prior year period.
  • General and administrative expenses in the first half of 2018 decreased by 43.8% to US$0.9 million from US$1.6 million for the same period of the prior year. The decline was mainly due to a decrease in professional fees.

Loss from continuing operations in the first half of 2018 decreased by 14.1% to US$2.3 million from US$2.7 million for the same period of the prior year.

Income tax expenses in the first half of 2018 was US$0.14 million, as compared with an income tax expenses of US$0.2 million for the same period of the prior year.

Net loss attributable to China Digital TV Holding Co., Ltd in the first half of 2018 decreased to US$1.64 million from US$0.7 million for the same period of the prior year. The decrease was primarily due to a combination of decreased interest income and other income.

Non-GAAP net loss[2] attributable to China Digital TV Holding Co., Ltd in the first half of 2018 was US$1.57 million, as compared to Non-GAAP net loss of US$0.1 million for the same period of the prior year[3].

Balance Sheet

As of June 30, 2018, China Digital TV had cash and cash equivalents of US$24.6 million.

About China Digital TV

Founded in 2004, China Digital TV is a leading provider of cloud platforms, with gaming and other applications embedded, to PRC digital television and telecommunication network operators, enabling them to bring these applications to household television sets and other mobile devices.

For more information please visit the Investor Relations section of China Digital TV’s website at http://ir.chinadtv.cn.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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