Cogo expects China’s upgrade of standard electrical meters to advanced smart meters over the next several years to be a key catalyst for growth in the company’s industrial business.
Chinese utility companies plan to upgrade approximately 300 million standard meters (both commercial and residential), which will allow them to transmit data real-time back to an electrical smart grid, enhancing the efficiency of power transmission.
The smart meter upgrade and the country’s conversion to a national smart grid system are key components of China’s stimulus package, announced in November of 2008 and valued at $586m.
According to estimates provided by the China Electricity Council, the national smart meter roll-out will require $3.1bn in 2011. Total expenditures budgeted for the upgrade of the country’s smart grid will reach $40bn in 2011. Both Cisco and GE have announced new plans to pursue opportunities in these roll-outs in China.
Cogo recorded approximately $3m in smart meter revenue in the third quarter of 2009, following the close of its Mega Smart acquisition. The company expects this number to increase during the course of 2010, fuelled by the upgrade program. Cogo is already actively engaged with many participants in the smart meter roll-out in China, including Holley Metering, Wasion and the Hexing Group.
Jeffrey Kang, CEO and chairman of Cogo, said: ”We are very excited about the opportunities available to Cogo over the next few years with China’s new but rapidly growing smart meter upgrade.
”We expect that Smart Grid and Smart Meter are going to be key factors in the overall growth of our industrial business, which we expect to grow much faster than the overall company in 2010 and beyond. Additionally, we believe that Cogo’s overall revenue growth will accelerate materially in 2010, with margins expanding as the economic and consumer situation in China continue to improve.”
