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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.
Am i mistaken in believing that earlier this year you changed from being very negative to being very positive about this company after buying shares in the company?.What are the chances of this happening again?
Firstly, most companies who look to work in India set up a JV, its very normal. You have been talking about Indian sales for years, so how can you be surprised at the mention of a JV, its the way to do business in India. Secondly the non-exec said what is expected, they will "review the dividend policy".........yes, all companies do that with a view to paying their lovely shareholders more. I would have taken more from "we are not immune to whats going on in the world" as more significant.
Today's Telegraph has a brief interview with Peter Crystal, a non-exec director of CHNS. The Telegraph don't seem to put these Monday company profiles online, so here's my hand-typed highlights! The two most interesting points are: On the outlook for CHNS: "We see the outlook as encouraging. The view is that we have a large potential outside China if we need it. We have a joint venture with an Indian company." Is that the first we've heard of an Indian JV? And as I suspected, the divi issue is simply to be reviewed at the year-end as CHNS have done before: "First of all, we didn't scrap the dividend. At a time when we are talking about a major recycling project (China Shoto is preparing plans to invest in a major recycling plant for lead acid batteries that will generate raw materials to sell to other battery manufacturers) and we are not immune to what is going on in the world, we thought it was the right thing to do" "The intention is to review that decision and pay a dividend at the end of the year, within the parameters of last year's dividend." He sees the only impediment to growth as being that because some of the senior people don't speak very good English he sometimes fails to get across "what we are doing". If that's the only impediment then that's fine by me. IMHO CHNS remains a complete and utter bargain at these levels on a P/E of 4 and at below TNAV.
progressive country+progressive sector+cash+profits=bargain .And the opportunity to pay for your shares in devalued stirling.I think anybody buying now will not be dissapointed in a years time.
The Chairmans departure and the way it was handled will leave a bad taste for some people, along with of course the flat business performance (in local currency terms) and the big cash drain down. Well, for the brave holding on, good luck.
Cant believe anyone would surrender their shares for 198p, the interim report highlights the fact that the bulk of their sales year to date will be realised in income in the second half of the year, as has been the case for the last 3 years, their market is seasonally affected. Sales & profits have increased at levels most companies can only dream of at the moment and the chinease economy growing at 6%+ per year. You might not make 2-300% here but its as surefire a return as your going to find over a 3-6 month period. Shame they scrapped the divi though
Seymour Pierce are very positive as follows (pasted from another bb) - they haven't always been so regarding their own clients. They should also add the short-term investments on to the cash balance as they have in the past - CHNS actually have £20m net cash including these. The price is now 196p compared to the post-results Buy recommendation at 240p!: "China Shoto 3,5 (BUY) - Going Green: H1 Results to 30 June 2009 CHNS.L (240p) Market cap: £56m Results reflect strong demand from China Mobile, China Unicom and China Telecom which are increasing network coverage and need backup batteries to support mobile infrastructure. Accordingly, China Shoto reported sales growth of 41% for the six month period and 47% uplift in pretax profit. This margin expansion reflects a lower lead price and a larger proportion of sales coming from backup batteries. These results show a pretax profit of £6.4m on revenue of £96.4m for the six month period. Our full year forecast is a pretax profit of £12.5m on revenue of £200m. We are therefore comfortable that China Shoto is on course to achieve this estimate. The company has announced that it intends to invest in a new lead acid battery recycling project. We see this as a prudent step by China Shoto to offset environmental concerns with its product suite. Accordingly, the group will not pay a dividend at the interim stage as capital expenditure increases. We retain our forecast of a 5p full year divid
Let's talk about currency appreciation. Nobody here seems to have taken into account that the 23.4p EPS in H1 was AFTER a one-off hit of £1.2m impairment provisions. Thus the true trading profit for H1 was around 28p EPS, compared to around say 17p EPS last H1 after taking into account the much smaller impairment provisions in that half. At that rate CHNS could announce 56p adjusted EPS before impairment (as for example WNN did the very same day of the interims!!) at the year end. The market's perception of CHNS might then be very different on a P/E of just 3.5. Even with 30% currency appreciation, you can see that profits and EPS are significantly up on last year, despite the collapse in exports and the sliding world economy. And given the complete reversal in sales to India the overall 3% rise in sales in the host currency - at much higher margins - is surely a terrific performance against most companies' performance in the same period.
It seems probable that share purchase was being negotiated over the last few weeks when the price was lower and it should not be forgotten that the seller has made a large profit on his shares.It is not unusual for bussiness people to clash on ideas,especially a company that has many different options availible such as china shoto.
Just reduced y holding and agree it looks messy with no CEO. The results were not good and at least the Chairman has gone for a quick break. We could read something into the discount but maybe thats the best for both parties. More importatantly the top line seems to have stalled and the best prospects as per the Interim statement is from lead recycling. Profitable maybe but possibly a diversion from the main business unless that is all there is out there. On the other hand the shares are on a low PE.
Well another RNS today. http://www.investegate.co.uk/article.aspx?id=200909160958131430Z The ex-Chairman now dumps all his stock for a discount 180p a share to the CEO who is also the new Chairman and also the major holder with now 65% of the shares in his control. Is it getting all very mucky and messy ? And why did the ex-Chairman dump all his stock for a discount price ? Does he know something is coming ?
This is in a sector that should see huge growth and could see absolutely spectacular growth.There can be little doubt that chinese demand for batteries both traditional and new age should increase substantially,The present share price does not reflect the company.This is a cash rich company with excellent profits that has invested substantially in research and development.It is only a matter of time before a western company takes the opportunity to take this company over at the present share price.
At what point are you going to buy in??Considering that the company is in green tech markets,building a lead recycling plant ,and selling products for solar power and electric cars....../What is your price target for re-entry? The currency figures due to a weak pound, on average, depreciated in value to roughly 12-15 % from the period of interim 2008 - interim 2009. It seems you are overplaying the currency differences.Some may call it deramping.
And those currency movements really do "hype" the figures. If you convert the figures back to RMB you can see a different tale. 2008 1st half sales = 957,723,147 RMB 2008 2nd half sales = 1,424,220,260 RMB 2009 1st half sales = 985,157,893 RMB So sales are really near flat on H1 2008, and well down from H2 2008 to H1 2009. 2008 Interim RMB to Pound rate was 13.9622 2008 Prelims RMB to Pound rate was 12.4398 2009 Interims RMB to Pound rate was 10.2127 So as they report in sterling their sales, EPS, cash etc.. are all being nicely boosted by the falling pound as they convert from RMB to pounds. However, this little "performance enhancer" is now over (and its been worth 30% boost to sterling figures from 2008 interims to 2009 interims) Always convert figures back to local currency when you get these AIM companies that report in sterling and get a nice boost from currency movements, a better and more transparent picture appears.
Interim dividend slashed. Cash down by a large amount. Exports falling. Weak statements. Inventory and Debtors rise by large amounts. Boardroom problems and the major holder who no becomes CEO and Chairman (meaning that in terms of transparency CHNS is even worse IMO) (And its not a good time given their statements today to be becoming less transparent) Thats why the price went down and will likely keep in a falling trend in the coming weeks and months.
Dont like ramping but looking at the unusual buying activity and strong day by day rise in sp here ahead of interim results in just over a week someone knows whats coming. All factors are in place for results to beat forcasts significantly and this already trades at far to low a P/E. This has many similarities with WCC 6 weeks ago.
Expecting this to spike sharply within next 2 weeks, interesting rise in sp from 190 - 216 recently despite turbulence in the chinese economy, good results probably expected. Holding my prediction you'll be seeing close on £3 here after results and eps forcasts, could even see a divi increase
the rare earth resource wars start here: Posted this link on EML as well as I think its applicable to both http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article6818905.ece I know a lot of CHNS is lead based battery action but now they have the subsidiary deal with China Mobile etc one can probably assume that more sophisticated ones are in the pipeline. Given that 50% of rare earth metal resources are in China who do we think will get first dibs on them for battery making? A chinese supplier or someone else? Add this to low P/E's etc etc and its looking even more compelling
To some extent the sp on this has stalled and is being held at 200 because the companies last financial update was so staggeringly good i think the market is cautious as to whether it can be repeated/improved upon. Results are due very shortly, if they have repeated performance and i cant find anything to sudjest otherwise (if anything the underlying currency movement should increase their profits further) then this is going to soar upwards just like WCC has done in the last month. This is overdue a move upwards and now is a great time to load up here. Where else are you going to find a rapidly growing company operating within an economy growing at 6% trading at a P/E of 4???? Balance sheet is solid, major contracts with leading telecoms companies locked down for many years to come, even pays a divi. When im looking at so many companies at the moment just bleeding money with horrific debt levels and people are piling into them like sheep at 15-20 multiples it just seems absolutely crazy to me?????
What does CHNS have to do for it to fly?It has had excellent results reported, with great growth and for the future. With this kind of growth it should be on a high pe., yet it is on a future earnings pe of less than 4..... What is holding it up?
This companies last results were so brilliant comnsidering the economic climate that i think the sp has almost been held back because the market is nervous as the whether it can be repeated. With results pending this could absolutely fly up to £3 in no time at all if its positive again and no reason to sudgest it wont be. Chinese economic stimulous has been far more effective that any other country could manage, and they didnt have anywhere near the problems of the rest of the world to start with.
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 pr
Very quiet here lately, nice to see this hit a new yearly high today, could see some real movement to 250p here in the next month with earnings due. Think is due a move higher just like the surge WCC is currently enjoying.
Have read CHNS have confirmed the 40p EPS as an error/mis-reporting. EPS of 47p for next year still. Agree that WCC represents better value but happy to be holding both of these.