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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?............"