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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. .................

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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.


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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


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And the results are quite good indeed.


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

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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

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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.

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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.


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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.