BEIJING ( TheStreet) -- China's 3G mobile network coverage, which was initiated in 2008, has now entered a more advanced stage with the total subscriber base surpassing 18 million users. The next stage of growth will be driven by expanding coverage across smaller cities, towns and tourist locations across the country.

The final stage of China's 3G infrastructure implementation requires setting up a large number of base stations and associated equipment. In turn, this will drive demand for cables and wires.

We have identified two cable and wire manufacturers that could benefit from this growth. They are Fushi Copperweld ( FSIN) and Lihua International ( LIWA). They are trading at attractive forward price-to-earnings ratios of of 8.09 and 7.72, respectively.

Innovation Must Start in China (Forbes)

In comparison, American counterparts Coleman Cable ( CCIX) and Encore Wire ( WIRE) trade at forward PEs of 15.25 and 55.85, respectively.

Fushi Copperweld

Fushi Copperweld is a leading global producer of bimetallic wire products, a cheaper alternative to more expensive solid copper wires. The Company sells copper-clad aluminum (CCA) and copper-clad steel (CCS) products to customers worldwide that operate primarily in the telecommunications, electrical utility and transportation industries.

During the quarter ended March 31, the company reported revenue of $59.5 million, up 68.9% from $35.3 million in the same quarter a year ago. Net income more than doubled, to $7.4 million from $3.1 million in the first quarter of 2009.

On April 29, the company announced that it had completed the expansion of its Dalian facility to produce an additional 8,200 metric tons of production capacity per year for its patented Copperweld CCS wire. This would result in total annual wire and cable production at its Dalian factory of 48,200 metric tons, nearly double the plant's previous capacity.

According to analysts polled by Bloomberg, revenue is expected to be $261 million and $328 million for 2010 and 2011, respectively, representing growth of 43% and 80%, respectively, over 2009 levels.

Recently, brokerages like Roth Capital Partners and Jefferies have given buy ratings to the stock, with price targets of $17 and $16, respectively, indicating 60% to 70% upside from current levels.

Lihua International

Lihua International is a CCA magnet wire producer in China. The Company operates in the bimetallic wire manufacturing industry. Its products cater to wire and cable industries and manufacturers in the consumer electronics, white goods, automotive, utility, telecommunications and specialty cable industries.

During the quarter ended March 31, the company's revenues jumped 208% to $63.2 million from $20.6 million in the first quarter of 2009, driven by higher demand for its copper wire and copper rod products. Net income increased 85.5% to $7.4 million from $4.0 million a year earlier.

During the first quarter, the company commenced production on two new high-speed copper magnet wire and copper fine wire production lines, increasing copper wire production to 20,000 tons per year. The Company also plans to add four additional high-speed production lines this year, which will bring annual production capacity of copper wire to 25,000 tons.

According to analysts polled by Bloomberg, revenue is expected to be $230 million and $529 million for 2010 and 2011, respectively, representing growth of 43% and 228%, respectively, over 2009 levels.

Recently, Rodman & Renshaw rated the stock as a market outperformer with a target price of $17, or 100% upside from current levels.

China's 3G Investment Cycle

The total investments to fund construction of 3G networks in China totaled 160.9 billion yuan (approximately $23 billion) during the first year of China's 3G era, according to statistics released by China Mobile ( CHL), China Unicom ( CHU) and China Telecom ( CHA).

These investments are targeted to reach 400 billion yuan ($57 billion) by 2011 as the number of 3G users is expected to reach 150 million. As of March 2010, China's 3G mobile user base was 18.09 million, up 12.6% over the previous month, according to data released by the Ministry of Industry and Information Technology (MIIT).

MIIT also expects the number of 3G base stations to exceed 400,000 by 2011, covering all cities above prefecture level, highways, tourist spots and most countries and towns. The construction of these base stations demands RD and coaxial cables such as copper-clad aluminum (CCA) products.

According to the International Cable Federation (ICF), Chinese network operators installed 79 million kilometers of cabled fiber in 2009 (47% of the world market), up 89% from 42 million kilometers in 2008.

More from Technology

Elon Musk's Latest Twitter Tirade Is the Dumbest Thing on Wall Street

Elon Musk's Latest Twitter Tirade Is the Dumbest Thing on Wall Street

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Some Companies Are Already Feeling the Effect of GDPR

Some Companies Are Already Feeling the Effect of GDPR

Experts Break Down GDPR Risks for Investors

Experts Break Down GDPR Risks for Investors

Netflix Ready to Surpass Disney as America's Most Valuable Media Company

Netflix Ready to Surpass Disney as America's Most Valuable Media Company