.

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."