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China Digital TV, a New York-listed, Beijing-based conditional access provider, signed 18 new deals with Chinese cable operators during the third quarter.

In its first results as a publicly-traded company, China Digital TV saw profits for the quarter to end-September rise 53% on the same quarter the previous year to $8.8 million. Revenues rose 37.3% to $14.4 million, up 28.9% on the previous quarter.

China Digital TV accounts for some 45% of the Chinese digital CA market. Over 140 million homes in China subscribe to cable TV, but most are still analogue. However, the government has ruled that all analogue TV must be converted to digital by 2015. And a recent study from Media Partners Asia said its analysts expected around 84 million to have migrated to digital by 2010.

At June 30, China Digital TV had installed CA systems at 130 network operators. And for the quarter to the end of September, the company shipped 1.9 million smart cards - 23.6% more than in the previous quarter.

The company staged its IPO in early October, raising over US$190 million by floating 22% of shares. Initial trading lifted its shares from $16 to $35. That had fallen to $32.14 by close of trading on November 16, although the price has been as high as $55.31.

Mason Xu, China Digital TV’s Chief Financial Officer, said: “Our successful IPO last month on the New York Stock Exchange demonstrates the confidence of investors in China Digital TV’s business model as well as in the tremendous potential of China’s digital television industry. In the coming quarters, we hope to leverage our deep understanding of the local market, leading industry position and long-term commitment to R&D to capitalize further on this exciting growth.”

However, while the company is attracting business and has a phenomenal operating margin (65% for Q3), its actual revenues are relatively low. China Digital TV expects revenues for the final quarter of 2007 to be between $15.5 million and $17.5 million. That said, those figures represent year-on-year growth of 61% to 82% so the potential for much greater revenues is there.

Investment bank Piper Jaffray recently initiated coverage of the company with a Buy rating and a target price of $43. Operating margin is expected to stay high, the bank said.