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Having been (and its been quite rightly) bearish on this from over 200p levels down, I have been talking to some friends and have been talked into this one being bullish now.

It transpires they will be, or very close to, being cash flow positive this past year, owing to the fall in the price of lead amongst other things. They are forecast to be strongly cash flow positive in 2009, and this will be shown in the payment of a high cash dividend for the 2008 results (which are due next month).

They will be doing over 40p of EPS for last year, when the results come, and after being rightly sold down, it appears to be the time to no buy back into the story.

Their order book is strong for 2009 (I had feared not but it seems it is) and so there is no reason that are obvious now, given the info I have been told, not to be buying in as the PER is less than times 3.

All IMHO !! DYOR !!

A summary of the recent Seymour Pierce note :

""Seymour Pierce reiterated its 'buy' stance for shares in for battery maker China shoto (CHNS) ahead of the company's 2008 results due to be released next month. It praised the resilient qualities of the business, noting that capital spending by the mobile operators is planned rather than discretionary. "More than 90% of China shoto’s revenue is sourced domestically. India is the sole overseas export market and accounts for just 10 million pounds of sales. Investors fearing a drop in China’s exports need not be concerned about China shoto," argued the broker. With the shares trading on a current multiple of just 2.6, the broker expects the publication of the firm's 2008 results to prompt a re-rating. China shoto shares moved 4p higher on the note to 115p."

Would like to see these back to 200p +
Good breakdown and estimates here,
Businessweek

One area of concern in the past was bank debt, and rightly so, however the government is encouraging borrowing and is going all out to support business in these difficult times.

The effect on CHNS is that their gearing ratio is not a concern, and in fact as the cost of borrowing is reducing, so their costs are also reducing, which is bullish in terms of their cash flow.

Can we expect something like a 5p dividend or more in cash ? Well, that would certainly be a strong sign, and would mean you are getting more here than keeping your money in the bank.

Blimey - never thought I'd see you bullish on a share - every previous posting I've seen from you has been pro-shorting in nature.

What's happened ?

????

Been bullish on RCG and AST for some time. Now added CHNS to that list.

Good man, and two I'll have a look at now myself, but as I say always thought you were an addicted shorter from postings I've read

Initial quick research

RCG - Serious concerns on the corporate governance side for this one. Interesting to note that to address these the company is seeking a HK listing, given the more stringent conditions imposed in the Far East. Says a lot about the weakness and risks of investing in AIM companies imo

In terms of other initial thoughts - this one doesnt grab me, and the instinct from what Ive read so far suggests that the company will ultimately delist off AIM. Board chatter suggests that the institutions have ignored this one, but that can work both ways of course, and should they discover what youve seen then the SP should re-rate.

Seems to have won various awards, and contracts with blue-chips, so maybe theres something to this one.

Is there, and why have you bought this one ?

AST - location of fields bodes well for extraction. Director purchases at 2.75p. Board changes last year - Cant initially see why, but do like the option price for the new FD

Funding clearly an issue for this company - what has happened to this Netherlands sale which seems crucial to their funding ? And the VAT reclaim.

Again, my initial gut feel is that there seems to be a lot of bad news coming out from this company - delays, board changes, funding concerns etc

Appreciate the reasons to invest in both

RCG - yes, there are concerns, and they are addressing them. The issue still is the Nina Wang holding, see my post on the RCG thread.

CHNS - yes, its been ignored, however that might stop now. They should be starting to generate cash again, and a decent full year dividend will reassure people. They also are not reliant on exports, and lucky for them are benefitting from the government stimulus plan via the continued expansion of the Chinese Mobile Networks. They are also into Wind and Solar power. A good dividend and defensive properties should see people move into this one after results.

AST - yes funding is an issue, and why the SP is where it is. However the upside is big, and the downside very minimal at 3p, so its a minimal risk/big reward scenario.

As for me, normally bullish, but been bearish since mid 2008.......and rightly so. Now there are bargains to be had, a few, and so this is reflected :)

The reason the company and the broker are confident of a strong order book is the ongoing expansion of the Chinese 3G network, and all the new base stations being installed. This gives CHNS a strong base revenue stream excluding their wind/solar/car/bicycle sides.

http://intech-group.com/?q=china-mobile-seek-bids-3g-work-expansion

http://www.newsgd.com/news/guangdong1/content/2009-03/03/content_4954339.htm


This article looks for US companies that will benefit from the 3G expansion in China.

http://seekingalpha.com/article/124031-which-u-s-companies-will-benefit-from-china-s-3g-expansion

However, there is one UK AIM listed company that will benefit, and they are China Shoto, with all the new backuo battery needs for the expansions planned and in progress in China. The government wants the rollout to continue, they want to spend money to create jobs and keep people employed, and so the outlook for CHNS looks very rosy, ignoring all the other stuff they do and just looking at the backup battery market for mobile base stations. Add in the bicycle, golf cart, car batteries, and then the wind/solar power side and well, the outlook does seem good.

.

Wonderful news, potentially 40,000 base stations needing back up battery installations too.......

http://www.tradingmarkets.com/.site/news/Stock%20News/2225939/

China Mobile Purchasing Equipment for Third-stage TD Net

Tue. March 17, 2009; Posted: 08:24 AM

Yesterday China Mobile officially kicked off wireless telecoms equipment procurement for its third-stage TD-SCDMA network by sending out the bidding documents to telecoms equipment makers such as Datang Mobile, ZTE, Ericsson, and Nokia Siemens.

This time China Mobile will procure about 40,000 wireless base stations for its TD wireless networks in more than 200 Chinese cities.

Since it got the third-stage project off the ground in January 2009, China Mobile so far has put an end to the initial exploration for installation of base stations in 31 provinces across the country.

China Mobile procured CNY 5.38 billion worth of wireless telecoms facilities for its TD networks in 28 Chinese cities, which included 23,000 base stations under the second-stage project. Based on that, China Mobile this time is expected to purchase CNY 8.6 billion worth of wireless equipment for the third-stage project.

Latest numbers from China Mobile show that it had built up TD wireless networks in ten major cities last year. Now it is extending the networks to another 28 cities under its second-stage project. And it is slated to kick off 3G services in these 38 cities this June.

An executive from China Mobile discloses that the TD networks so far have covered 95% of the first ten cities. And integration between China Mobile's 2G and 3G networks has been carrie.................................

http://www.cn-c114.net/583/a395851.html

China's Operators Prep Next 3G Wave

Updated:2009/3/17 14:40

China's 3G rollout machine is pumping on all cylinders, according to the latest reports from local media and analysts.

With some urban 3G networks already up and running, China Mobile Ltd. (NYSE: CHL) is reported to have initiated a mobile infrastructure tender process for the third round of its TD-SCDMA rollout.

Meanwhile, China Telecommunications Corp., which received a CDMA 2000 3G license in January, has begun trial 3G services in Shanghai.

The latest China Mobile tender is for 39,000 base stations with TD-SCDMA systems that will provide coverage for 200 cities, about 50 percent bigger than the second-round tender, according to this ChinaTechNews report.

The vendors' role call is expected to match that of the second-round tender. According to a recent Pyramid Research report, "Capex in Asia-Pacific," Datang Telecom Technology Co. Ltd. was the biggest winner of China Mobile's phase two tender, with a 40 percent share of the spoils, followed by ZTE Corp., Huawei Technologies Co. Ltd. , Nokia Siemens Networks , Potevio Co. Ltd. , and Ericsson AB.

ChinaTechNews also suggests that Guangzhou New Postcom Equipment Co. and FiberHome Technologies Group , which use Datang's equipment, may also join the tender this time.

China Telecom is also set for a rapid rollout of its 3G services. An amendment to its articles of association that allowed for the inclusion of its CDMA 2000 3G business was agreed upon at an Extraordinary General Meeting held on March 12.

Since then, Telecom has launched trial 3G services in Shanghai and the nearby Jiangsu province, according to the China Daily newspaper.

China Telecom, which now runs the CDMA network previously operated by China Unicom, plans to expand its 3G network to more than 100 Chinese cities by the end of this month and all urban regions by mid-May, according to the report.

In China’s recent major telecom service provider restructuring process, China Telecom took over the CDMA network previously operated by China Unicom.

Still building strength, and results soon.

Should be at least a 5p cash divdend coming and its on a PER of less than times 3 (will be historic and also current year).

Good day again today.

Extract from this link :

http://www.fool.co.uk/news/investing/company-comment/2009/03/24/stocks-so-cheap-theyre-nearly-giving-em-away.aspx

"................China Shoto (LSE: CHNS) looks like another successful and growing business. The Company manufactures and supplies batteries, mainly to the Chinese market. Its recent trading statement revealed that profits in 2008 will be ahead of market expectations and 50% higher than in 2007. There is some bank debt although it looks comfortably manageable at only 23% of the value of total tangible assets. So why does the market value China Shoto at only 2.9 times 2008 earnings, especially when there is a forecast dividend yield of 4.3% on offer?............"

Don't worry about the PE ratio as this must trend towards reality over time - personally expect this to be double this SP within a year, as the market wakes up

Recent days have suggested that people are beginning to notice

They certainly needed to be sold down in the past, with their risk profile rising high with the lead price increases and also finance costs rising, however the climate has changed, order book is strong, outlook is strong and finance and lead prices are now low.

With a 5p cash dividend or more.......well, looks a strong buy as anything now.

On a nice little run today, and still on less than 3 times earnings, sooooo cheap.

.

A reminder of what Seymour Pierce said earlier - and with results due April, and when people see the earnings growth, the strong outlook and the dividend (will be cash and maybe over 5p a share), for sure the potential for a significant re-rating is there.


"A summary of the recent Seymour Pierce note :

""Seymour Pierce reiterated its 'buy' stance for shares in for battery maker China shoto (CHNS) ahead of the company's 2008 results due to be released next month. It praised the resilient qualities of the business, noting that capital spending by the mobile operators is planned rather than discretionary. "More than 90% of China shoto’s revenue is sourced domestically. India is the sole overseas export market and accounts for just 10 million pounds of sales. Investors fearing a drop in China’s exports need not be concerned about China shoto," argued the broker. With the shares trading on a current multiple of just 2.6, the broker expects the publication of the firm's 2008 results to prompt a re-rating."

Its new base stations galore in China presently, tens of thousands going to be installed in 2009 and 2010 and 2011 and more........

This means massive new demand for new back up batteries (a la CHNS) and also the repeat business of course of replacements when old later down the line.

Three stories from the past two weeks which gives an idea of the frenzy to install new systems in the coming years.

http://www.unstrung.com/document.asp?doc_id=174019

http://www.unstrung.com/document.asp?doc_id=173883

http://www.unstrung.com/document.asp?doc_id=173650


An exciting period of sustained growth for CHNS going forward one sees.

would not touch anything chinese with a bargepole, why don't they list in their own country??? See this is being spammed all over advfn and the like, dodgy, leave well alone.

I do not condone spamming if someone is, however, they are not wrong if they are saying how exciting CHNS looks.

Dodgy ? If you can research the company and say they are dodgy one can only assume that you are a very dodgy person kate bates :) LOL

Cash dividend of what should be over 5p, over 40p of earnings, strong cash generation in half 2, strong outlook, sector undergoing a boom, exposed also to "green energy".

It has just about everything going for it.

bargepole stock anything chinese. Spammers everywhere trying to promote it like yourselves, no doubt another TAIH this pile of rubbish.

in fact i think i'll short this as obvious someone trying to pump the price up given all the weekend spamming.

TAIH was and is a pile of plop. No argument there.

This company, CHNS, is looking very good now. Wait for results kate bates and see if you can pick any holes in them.

By return, I shall keep an eye on anything you like, and return the favour. So what do you think is good kate, dont be shy, tell us please.

not this rubbish, try a search to see what i'm in instead of spamming this dead dog everywhere.

Have a read of what TMF said the other day - this is not rubbish, and you are making yourself look a total idiot by trying to say it is.

Thats your perogative though.


Extract from this link :

http://www.fool.co.uk/news/investing/company-comment/2009/03/24/stocks-so-cheap-theyre-nearly-giving-em-away.aspx

"................China Shoto (LSE: CHNS) looks like another successful and growing business. The Company manufactures and supplies batteries, mainly to the Chinese market. Its recent trading statement revealed that profits in 2008 will be ahead of market expectations and 50% higher than in 2007. There is some bank debt although it looks comfortably manageable at only 23% of the value of total tangible assets. So why does the market value China Shoto at only 2.9 times 2008 earnings, especially when there is a forecast dividend yield of 4.3% on offer?............"

why am i? It's ramped up rubbish and i suspect you are the one who has been spamming this all over advfn. Well done, the quickest way to alienate anyone from touching a share. Toodle peep.

And you continue to make yourself look an idiot.

Can you tell us why its rubbish ?

Is it because they are producing over 40pence of earnings ?

Is it because they will pay a cash dividend of over 5pence ?

Is it because the PER is around just times 3 ?

Is it because the company have said 2009 will be another strong year ?

Is it because H2 will be strongly cash flow positive from operations ?

Please shed some light or you really are making yourself look a fool and a tool when it comes to valuing companies.

BTW I do not post or use ADVFN so do not go accusing me thanks.

Building nicely, price is now up from 113p mid a few weeks back to now over 130p mid, and its still ridiculously cheap IMO :)

Couldn't agree more, and pleased to see the "slow" steady progress that surely must continue to the 2 mark (PE of around 5)

Good end to the week. Will results be next week ? They are due in April, so anytime now.

If the market can carry this optimism into the results week, then that could be just the filip we need to take this to a new trading range

Nicely up today again. With what should be well over 40 pence of earnings and a very positive outlook this should and could soon be well north of 250p levels.

Its a steal at under 10 times earnings....and that is over 400p.

.

.

Results 28th April.

From uk-analyst.com today :-

"Seymour Pierce issued a 'buy' note on China Shoto (CHNS), the batteries company, ahead of its full year results due to be released on 28th April 2009. The broker expects the company to report pre-tax profit of 10.5 million pounds on revenues of 170 million pounds representing a rise in each of 50% and 58% respectively. The company is a major beneficiary of the cellular infrastructure spend. The broker added: "We believe the market will concentrate on the outlook for 2009 and 2010 in the context of the growth estimates for China and India. We note that Chinese first quarter GDP data is due out today. Growth of 6-7% is expected. While this is down on our December 2008 estimate of 8%, an above positive 5% number is exceptional relative to other global economies. Against this background we think China Shoto is well-positioned. China Shoto has a modest export exposure (less than 10% of sales) to India. We expect the company will update the market on trading in that territory on 28 April.

Lively today.

The Seymour buy note will have generated some interest, however there is more on the bones if look.

Firstly, CHNS is on a low PER, trading now at sub 4 times soon to be historic EPS.

That on its own means little in the current climate as many stocks are on low PER's however ;

Secondly, CHNS should be paying a cash dividend of circa 5p, and in these times when banks are giving nothing on savings accounts, a nice little yield on a stock makes a different.

Once again, a few low PER and dividend paying stocks about, however, the key here is that CHNS has a strong outlook, or so we hope. The on going "domestic stimulus" in China is designed to boost domestic demand, and help the domestic situation. Its not about "saving the world' its about saving China. This is were CHNS benefits as the telecom companies have put in place major expansion plans for 2009/10/11 and onwards.

This boosts the backup battery telecoms side for CHNS, and allows further growth for the next visible few years, ignoring their other electric bicycle, green energy and other sides of the business.

So you get a low PER, a cash dividend and strong growth outlook, and that is what makes CHNS special IMO, a good investment perhaps.

Time will tell.

Results due 28th April.

Fully agree proselenes, and appreciative of your newsflow.

I think you should add that it is not soley about the telecomms market, but that there are a whole host of others in which the company is involved, and which by the nature of what is happening to China now, is likely to provide golden opportunities.

Your point re:divvies should additionally comfort those with a fear in sending their money out east (rather than keeping it in a nice secure european bank like northern crock, hbos, or iceland.com !!!)

Seymour Pierce notes last week :

"China Shoto 3,5 (BUY) - Results preview
CHNS.L (142.5p) Market cap: 33m

China Shoto reports its FY 2008 earnings on 28 April. We expect the company to report PBT of 10.5m on revenue of 170m. This represents an uplift of 50% and 58% respectively. The company is a major beneficiary of cellular telecoms infrastructure spend. We believe the market will concentrate on the outlook for 2009 and 2010 in the context of the growth estimates for China and India. We note that Chinese first quarter GDP data is due out today. Growth of 6-7% is expected. While this is down on our December 2008 estimate of 8%, an above positive 5% number is exceptional relative to other global economies. Against this background we think China Shoto is well-positioned. China Shoto has a modest export exposure (less than 10% of sales) to India. We expect the company will update the market on trading in that territory on 28 April.

Shares in China Shoto have risen by 39% so far this year. Coincidentally, the Shanghai Composite index has risen by the same amount. On our December 2008 forecasts, the shares are trading at a PE multiple of just 3.5. We expect forthcoming results to prompt a re-rating."

Up a good 4% on a market down day, cannot ask for more.

Well, including today only 3 trading days to go before results on 28th, and that should spark a rerating as people get in for the growth and also the cash dividend.

Nice moves again today.

And a strong finish to the week.

To focus the mind on the staggering demand for Battery Back Up systems just for Mobile Base Stations (ignoring all the other, and not insignificant stuff than CHNS do).

The demand between now and 2012 is just massive........

Some snippets below -


http://www.tdscdma-forum.org/en/weekly/49/

China Mobile to Construct 140,000 TD-SCDMA Base Stations in 3 Years

Sina Tech

On April 7, Huang Yuhong, Head of Wireless Technology Research Group from the Research Institution of China Mobile revealed that TD-SCDMA can cover 70% of the Chinese cities by end of 2009. China Mobile plans to raise this ratio to 100% with more than 160,000 base stations in all cities by 2011. In the 1st round of TD-SCDMA network construction, China Mobile built more than 10,000 base stations. Since the 2nd round construction of TD-SCDMA network, China Mobile has intended to deploy about 140,000 base stations from 2009 to 2011. .................

-----------------

http://news.xinhuanet.com/english/2009-04/17/content_11196469.htm

Chinese Vice Premier looks to domestic standard for 3G development

www.chinaview.cn 2009-04-17 05:22:58

...................By the end of this year, China Mobile is to invest 58.8 billion yuan (8.6 billion U.S. dollars) in building 60,000 new TD-SCDMA base stations covering 238, or 70 percent of, prefecture-level cities, according to the Ministry of Industry and Information Technology.


-----------------------

http://www.telecommagazine.com/NewsGlobe/article.asp?HH_ID=AR_5159

China: a future for Internet but guidelines are necessary

3G offers opportunities for growth and multiplier effect

by Ek Heng, Asia-Pacific Correspondent

Thu. April 23, 2009

..........................China Unicom goes 3G
In another development, China’s third telco, China Unicom also unveiled plans to launch its 3G WCDMA services by end-April. It was reported to announce that it is looking to provide 3G services in the areas of data card, mobile music, mobile TV, mobile search and video calls. China Unicom has earlier announced it would built its 3G networks across 55 cities by first half 2009 to be followed by coverage to 282 cities by year-end.

Put this summary post on TMF.

http://boards.fool.co.uk/Message.asp?mid=11528229


.

And the results are quite good indeed.


http://www.investegate.co.uk/Article.aspx?id=200904280700142508R

........

Highlights

Revenue increased by 70% to 183.08 million (2007: 107.50 million)

Net profit up 79% to 10.07 million (excluding minority interests) (2007: 5.62 million)

Net cash flows from operating activities were greatly improved to 38.57 million (2007: outflow 3.11 million)

Foreign sales revenue up 329% to 29.71 million (2007: 6.92 million)

Diluted earnings per share up 76% to 43.14p (2007: 24.45p)

Awarded 'China Environment Friendly Enterprise', the highest State Environmental Protection honour

An interim dividend of 1.5 pence per share paid; the Board recommends a final dividend for 2008 of 3.5 pence per share

Comment from Richard Gill over at "sharecrazy". Confirms what I have been posting about, which is the massive spend ahead by China Telecom, and the other major customers of CHNS, which will result in "huge" potential orders.

I notice in the results today "huge" is quoted to the potential ahead.




"Richard Gill

Re: China Shoto - Backup batteries and more [Re: Proselenes] #444647 - 28/04/09 01:11 PM

Very good results.

Just been to a presentation by the management. Key point for me was that cash flow has improved significantly and that major customer China Telecom has recently almost trebbled its capex spend for 2009-11 in wake of the move to 3G"

This comment from Investors Champion :

http://www.investorschampion.com/blog/entry/china-shoto-amazing-turnaround-in-cash-fortunes

.


On another note the earnings forecast for 2009 has been upgraded to 47p (from 43p), which puts CHNS on a PER of less than times 4 and with NTAV of over 50M GBP ( for a market cap of presently circa 41m GBP), and of course, its paying a cash dividend.

.

Presently it looks like forecasts for this year are 47p EPS and 5p div, and for next year over 50p EPS.

http://www.growthcompany.co.uk/recommendations/1020952/china-shoto.thtml

China Shoto - BUY

Companies: CHNS 28/04/2009

Despite substantial growth, robust prospects and a decent dividend, battery-maker China Shoto trades on a bargain-basement rating.

Results for 2008 show that the Eastern China-based group lifted revenues 70% to 183.1m, pre-tax profits by 61% to 11.6m and earnings by 76% to 43.1p per share. The balance sheet was awash with cash at the year-end, after a sharp swing from 19m net debt in June to 22m of net cash, benefiting from a ‘cash flow management plan’ and perhaps good timing.

The bulk of sales are of backup power batteries to the telecoms industry, which has been investing heavily in its infrastructure of late and is set to receive many billions in future government support. Shoto claims a leading 20% market share and espies considerable continued growth as the three national networks maintain their expansion.

Another growth avenue was signposted in last year’s 329% increase in overseas sales to 29.7m, much of which was derived from India, which like China suffers from inconsistent power supply. Shoto has high hopes for other new offices in Moscow, Dubai, Singapore and Frankfurt.

Finance director Zhou Weigang says the group’s manufacturing capacity remains focused for the present on higher-margin backup power rather than its secondary product line, electric bike batteries. The company has mooted a capacity increase as well as new products for other markets, but a fundraising would likely be needed.

Based on forecasts for 2009 from house broker Seymour Pierce – of 12.5m PBT and 47p EPS – its shares are trading on a prospective price-to-earnings ratio of just 3.7 times, which seems far too low. Buy.

Bit more media coverage :

http://www.investorschronicle.co.uk/

Spectacular results from China Shoto

Created: 29 April 2009 Written by: Nigel Bolitho

While the UK seems to have little money to spend on infrastructure schemes to pull the economy out of recession, China is pumping RMB4trillion of its mega cash reserves into infrastructure schemes. And of that, RMB400billion is earmarked for 3G networks over the next three years. This is all music to the ears of China Shoto, which is China's largest producer of back-up batteries with around a fifth of the market.

But that benefit is to come. Look first at last year's results. Twelve months ago, brokers were expecting 2008 turnover of around 137m and unchanged profits. Instead, China Shoto has reported stunning increases in sales and profits while net cash inflow from operating activities jumped to 38.57m against a 2007 outflow of 3.11m. So it's not surprising that over this trading period the company's net assets per share jumped by almost three-quarters.

Demand for back-up batteries from mainly Chinese mobile phone operators soared last year. Turnover rose 83 per cent to 117m with sales to China Telecom and China Netcom up 335 per cent and 193 per cent, respectively. Dollar revenues from non-China mobile operators jumped from 6.9m to almost 30m. Indeed, so great was demand for back-up phone batteries that production lines for bicycle batteries were commandeered to meet phone demand. Of course, the latest results also benefited from RMB and dollar strength against the pound while careful use of tax concessions meant that last year's 11 per cent tax charge of 1.26m was just 3,000 higher than the 2007 figure.

For 2009, broker Seymour Pierce's revised forecast is sales of 200m and profits of 12.5m, producing earnings of 47p.


SHARE TIP UPDATE

Buy - That puts the shares on a PE of under four coupled with net cash equivalent to more than half the company's market value. China seems to be coming out of recession fast. A year ago we upgraded the shares to a buy at 145.5p, and they remain so.


----------------


http://www.investegate.co.uk/invarticle.aspx?id=98751

China Shoto shoots for green and BRICS
By Rob Mackinlay

Full-year results from an AIM-quoted Chinese battery manufacturer - China Soto - were amongst the most read announcements on Investegate.


On Wednesday, China Shoto’s shares stood at 181.5p, a rise of 1.68 per cent or 3p. The company's shares are maintaining an increase in value of more than 100 per cent from an 87.5p low-point at the beginning of December 2008.

Jim McCafferty, analyst at Seymour Pierce - which is the nominated adviser and broker for the company - retains a "Buy" recommendation saying: "Despite strong performance of the shares, they are trading on a 2009 price earnings ratio of just 3.8. We believe this rating does not reflect the company’s growth prospects."

During a press briefing on Tuesday, China Shoto’s chief financial officer (CFO), Weigang Zhou, and two company directors answered questions about the sustainability of the back-up battery business which is the company’s main source of income(China Shoto makes batteries that back-up mobile phone networks in case of power failures.

The response was that, even when networks are completed and batteries in place, there will be requirements for upgrades as technology improves. The company also that it has increased its business abroad with its export revenue increasing from 6 per cent in 2007 to 16 per cent in 2008.

Business in India makes up 85 per cent of its export revenue but it hopes to do business in other BRIC countries, as well as in Africa, where power supplies are also unreliable.

Efforts to develop new technology are also being made in other battery markets including electric bicycles. In its results statement the company said: "As China's largest producer of back up batteries and a China Environment Friendly Enterprise, the group intends to, ultimately, become a worldwide green energy solution provider. To that end, a new type of green energy storage product with high technology content is being developed."

Transparency, corporate governance, and allegiance to investors, have been among the concerns of professional investors in China and other emerging markets. Weigang Zhou said that being an AIM-listed company made it more transparent than many of its peers.

Also a survey of AIM-quoted Chinese stocks by Seymour Pierce showed that China Shoto’s largest shareholder, its president Y Shanji, holds a smaller stake in the company than the largest shareholders in other AIM-quoted Chinese companies. Y Shanji, who also founded the company, owns 47 per cent of its shares. Weigang Zhou said that Shanji did not have any other businesses.

According to its last available factsheet, the New Star Select Opportunities fund had 2.89 per cent of its assets invested in China Shoto, it fourth largest investment. The holding in China Shoto was made while the fund was being managed by Patrick Evershed who left New Star last year, and has recently joined Hargreave Hale. The New Star Select Opportunities fund is now managed by Trevor Green.

This comment from Hoodless Brenan in their end of week small cap summary. Personally I am buying more WCC as to me thats more undervalued now that CHNS, but anyway, I was into CHNS at 113p so plenty in the bag from earlier.

http://www.hoodlessbrennan.com/

China Shoto (CHNS, 179.5p, 41.9m) Final results to December 2008 for this Chinese producer of batteries and power supplies saw revenues increase to 183m (107.5m), pre-tax profits rise to 10.07m (5.62m) and EPS increase to 43.14p (24.45p) – very slightly short of the broker forecast of 10.5m pre-tax profits. DPS is 5p per share. As China’s largest back-up battery producer the company looks forward to 2009 with optimism, noting the boost to its local market place by the award of 3G mobile phone licenses. Forecasts are for 11.5m pre-tax and EPS of
43.5p with a held dividend, putting the company on a prospective PER of just 4.1 times – too cheap for such a well established business. BUY up to 270p level.

Up another 5% and now over 200p mid price.

I do not hold CHNS anymore, moved it all over into WCC as I think WCC is the best Chinese stock on the AIM, and so lowly rated it should multibag in 2 years.

Write up from the CHNS AGM, looks like earnings are forecast to fall from 43p to 40p.

http://www.fool.co.uk/news/investing/company-comment/2009/06/17/alices-agms-china-shoto.aspx

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Did the same this morning, have held since 06 and not done a lot for me bar divvy, so got 193p, + div. little profit better than none.

Yep. Looks like tax is going to increase and their currency gains diminish now with sterling going upwards.

Markets will see a fall in earnings from 43p to 40p and it could be sold off hard then.

Shame, nice business but markets and sentiment are just that. I am much happier having put all this money into WCC earlier, that one has potential to grow wildly in the coming 2 years.

Good luck Prosolenes.

The EPS forecast for this year is 47p EPS (43p EPS last year) and is unchanged - I've spoken to the broker today. The AGM attendee's note was incorrect.

At the current 186p the P/E is just 3.95, and CHNS still trades at less than tangible NAV with half its m/cap in cash.

The average rate for sterling last year against the yuan was 12.86. Even though the pound has risen slightly recently, at the current rate of 11.1 CHNS will continue to benefit strongly from exchanger rates this year.

Given:

- lower raw material prices
- favourable exchange rate movements
- lower interest payable on borrowings
- the explosion in Chinese and Indian telecoms

I'm hopeful that 47p EPS is a conservative estimate.

The broker also indicated there should be an H1 trading statement - this could happen in the next month or so given the 30/6 period end.

We can also be confident that trading to date this year is at least in line with expectations since no update was given at the AGM.

There is what I believe is EXTREMELY important news just up on the CHNS web site.

China Mobile have now announced the results of their procurement of back-up batteries for the near future.

CHNS's subsidiary, Jiangsu Shuangdeng, are easily the biggest supplier of all the companies in every category shown. This should secure a large portion of CHNS' sales for a while to come imho.

http://translate.google.com/translate?hl=en&sl=zh-CN&tl=en&u=http%3A%2F%2Fwww.shuangdeng.com.cn

" WIIG successful dual 12V Battery China Mobile Products

中国移动2009年UPS后备电池（12V）产品集中采购工作于近期完成，中国移动对外公布了本次采购结果及各厂商份额分配情况公布如下（排名不分先后）：

China Mobile in 2009 UPS back-up battery (12V) products focused on the completion of procurement in the near future, China Mobile announced the results of the procurement and distribution companies announced share is as follows (in alphabetical order):

1、12V/65Ah产品：江苏双登集团有限公司（32.26%）、浙江卧龙灯塔电源有限公司（25.81%）、深圳市今星光实业有限公司（22.58%）、广东中商国通电子有限公司（19.35%）等4个厂家； 1,12 V/65Ah Products: Jiangsu Double Tang Holdings Limited (32.26%), Zhejiang Wolong Lighthouse Power Co., Ltd. (25.81%), Shenzhen City Industrial Co., Ltd. today Starlight (22.58%), Guangdong in the state Electronic Co., Ltd. ( 19.35%) and other four manufacturers;

2、12V/100Ah产品：江苏双登集团有限公司（38.89%）、深圳市今星光实业有限公司（31.11%）、山东圣阳电源股份有限公司（8.33%）、浙江卧龙灯塔电源有限公司（6.67%）、广东中商国通电子有限公司（5.83%）、艾诺斯（中国）华达电源系统有限公司（5.00%）、北京南都昊诚电源设备有限责任公司（4.17%）等7个厂家； 2,12 V/100Ah Products: Jiangsu Double Tang Holdings Limited (38.89%), Shenzhen City Industrial Co., Ltd. today Starlight (31.11%), Shandong San Yang Power Co., Ltd. (8.33%), Power Co., Ltd. Zhejiang Wolong Lighthouse (6.67 %), Guangdong in the state Electronic Co., Ltd. (5.83%), EnerSys (China) Huada Power System Co., Ltd. (5.00%), Cheng Hao Beijing has the Southern Power Equipment Co., Ltd. (4.17%) and other seven manufacturers ;

3、12V/150Ah产品：江苏双登集团有限公司（27.78%）、深圳市今星光实业有限公司（22.22%）、浙江卧龙灯塔电源有限公司（19.44%）、山东圣阳电源股份有限公司（16.67%）、广东中商国通电子有限公司（13.89%）等5个厂家； 3,12 V/150Ah Products: Jiangsu Double Tang Holdings Limited (27.78%), Shenzhen City Industrial Co., Ltd. today Starlight (22.22%), Zhejiang Wolong Lighthouse Power Co., Ltd. (19.44%), Shandong San Yang Power Co., Ltd. (16.67 %), Guangdong in the state Electronic Co., Ltd. (13.89%) and other manufacturers 5;

4、12V/200Ah产品：江苏双登集团有限公司（38.89%）、浙江卧龙灯塔电源有限公司（31.11%）、深圳市今星光实业有限公司（9.68%）、艾诺斯（中国）华达电源系统有限公司（7.74%）、广东中商国通电子有限公司（6.77%）、山东圣阳电源股份有限公司（5.81%）等6个厂家。 4,12 V/200Ah Products: Jiangsu Double Tang Holdings Limited (38.89%), Zhejiang Wolong Lighthouse Power Co., Ltd. (31.11%), Shenzhen City Industrial Co., Ltd. Star today (9.68%), EnerSys (China) Huada Power Systems Limited (7.74%), Guangdong in the state Electronic Co., Ltd. (6.77%), Shandong San Yang Power Co., Ltd. (5.81%) and other six manufacturers."

Sold out of this one when it first went through 200p some months back, and it was a good move as I have trebled that money again in recent months.

As its now back to over 200p and results are soon its worth pointing out to watch for cash flow at the interims.

There could be significant outflow of cash into working cap, and the level of this will be a key thing to look for.

The headlines will be good, but the devil may be in the detail of the cash flow statement, so keep an eye out for that.

rivaldo look, its now even cheaper ;)

There are rumours doing the rounds of cash problems, perhaps thats why the Chairman left and dumped his entire holding.

Wonder if CHNS will do like GNG, sudden big discount placing to get some money.

Its the trouble with these types of companies, its the easiest way they can get orders is by offering the product free up front and "pay when you want later" terms. Its an easy way to ramp up revenues, its also an easy way to ruin when it all goes wrong.

Lets guess, they need to "strengthen the balance sheet" to "pursue large orders" - which means they have run out of cash and need some more working cap more times than not.

Interesting article :

http://www.fool.co.uk/news/investing/investing-strategy/2009/11/03/china-and-the-bigger-fool-theory.aspx

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One to avoid for now ? Interesting write up.

http://www.stockopedia.co.uk/article/view/34120


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The company openly says cash is tight and so cuts a small interim dividend to save cash, yet the figures released show cash at 32m (but with borrowings up to record levels).

The Chairman throws the towel in, dumps all his stock, at the same time.

The company has committed to a recycling plant thats going to severely use up the cash.

Whilst H2 is always cash positive for CHNS, in general H1 severely uses cash in working cap (or you can fund it by bumping up your borrowings from the banks).


With cash being used to fund this recycling plant, and with the company openly saying cash is tight, would it not, looking forward, suggest to people that whilst the Finals might look nice, interim figures in 2010 could be rather "cash tight". Could it be that the Chairman did not agree with the recycling plant as it will necessitate more cash being found by the company ? Will it mean that come year prelim figures, the company will be looking for placing monies in order to boost the cash position ?

Was the point of the recent city presentations a first step for the begging bowl to be put out soon, in order to raise funds to ensure that come H1 2010 they are not going to be struggling for cash and with bank borrowings already high could it be they will be forced into a sudden placing to boost the balances, if they cannot secure funding in the interim period ?

2008 and 2009 was a period of massive expansion for telecoms with new base stations going in on a massive scale, however, the outlook for 2010 is less new stations and lots more simple upgrades to existing. That would explain CHNS trying to move into new markets as the outlook for base station batteries is weakening along with increased competition.

I am unsure why the Chairman moved on so suddenly and dumped all his shares, but IMO he could have seen that the recycling plant is going to push cash to the limit and might mean a placing to raise funds. On top of that the base station battery outlook is weakening when you look to 2010 and 2011.

Therefore, as I am sure many have learnt, do not get fooled by people spouting EPS figures.

Cash (and committed cash spend) and outlook are key, not the EPS figures.

I have warned about placing worries for some time, nice to see a certain CHNS bull finally admitting that it may be necessary.

However, in the present market, the wolves will drive the price down if they get any sniff its going to be attempted.

To be expected.Could be a long period of negative growth now...not good at all. With the RMB to get even more appreciation it will cut back further on their export business and margins.


China Shoto plc
AGM Statement
RNS Number : 9760N
China Shoto plc
22 June 2010

AGM Statement & Trading Update

China Shoto plc, a leading Chinese battery producer and the largest supplier of back-up battery to China's telecommunication operators, will hold the Company's Annual General Meeting at 10.00 am today.

Yang Shanji, Executive Chairman, will make the following statement at the meeting:

Current Trading

In the Preliminary results for the period ended 31 December 2009 announced on 28 April 2010, the Company stated that they expected that China's major telecoms operators would shift their investment priorities from infrastructure construction to product marketing and development.

The Chinese government has increased greater control over low carbon, energy reduction and environmental protection. Accordingly, China's major telecom operators have reduced investment in infrastructure projects. Lower levels of investment have reduced domestic demand for back up battery products.

The Board had hoped that a recovery of global markets and the development of overseas, export opportunities would mitigate the fall in domestic demand. The Company remains committed to developing international sales, and it has achieved higher sales of certain product lines in difficult conditions. Nevertheless, the Company has experienced significant competition in overseas markets and global markets remain fragile. Further, exports and margins have become less competitive as the Renminbihas strengthened.

As a result of these factors, during the first five months of the 2010 financial year, revenue and profitability has fallen by approximately 15 per cent. when compared against the same period in the previous financial year.


Outlook

The Board is confident of remaining the largest back up battery manufacturer in China. It is well placed with its large R&D facilities providing improved products. The Company continues to expand its environmental activities and is progressing with its major lead recycling programme which will position the Company favourably. The Board remains committed to developing its strategy of developing international sales. A further update on trading, will be provided as appropriate.

Bad news comes in three's normally, and todays statement suggests to me this is just the start, there is more bad news to come.........

Brave people buying today, this could easily fall to 120p levels with more bad news to come.

Perhaps 40p EPS this year (down from 98p) and with a company thats gone ex-growth then 3 times earnings is fine, pending further bad news.........

One to avoid many will say.

Signs of a slowdown in China and increased competition overseas the valuation looks cheap and seemingly for good reason!

China Shoto surely now risks being viewed as an old style polluter, having to spend increasing amounts on environmental compliance, operating in what could unfortunately turn out to become a low growth market. The strengthening currency could also make life increasingly hard in overseas markets hardly the high growth offering investors seek from emerging markets.

www.investorschampion.com

CHNS is still too overvalued at 200p... 100p would be a fair value.

185p now... continuing downwards.

Looks like it missed by a mile and the business model with a focus on telcos needs revision!

Back to electric bicycles - the original focus on IPO
Commentary on www.investorschampion.com

China Shoto net profits down by around 30%
StockMarketWire.com


Chinese battery producer China Shoto estimates full year net profits will be down by around 30% on 2009.

The firm said it had experienced some challenging trading conditions in 2010 and the substantial decrease in the levels of investment by the three major Chinese telecom operators was expected to adversely affect the company's financial performance.

It said the unusually high spending in 2009 was fuelled partially by an economic stimulus package from the Chinese government.

It added: "As a result of reduced levels of spending by the three major Chinese telecom operators, competition has increased and contributed to gross profit margins declining when compared to the year ended 31 December 2009.

"As expected, the company's trading performance did improve during the second half of the year; however the board estimates that net profit for the year ended 31 December 2010 will decrease by approximately 30% when compared on a year-on-year basis to the previous financial year."