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Evolution China research note just issued per RM on ADVFN: http://www.advfn.com/cmn/fbb/thread.php3?id=11721562&from=38424 Extracts : RCG Holdings, 802 HK, HK$10.26, BUY (maintained), Target price HK$15.00 (raised from HK$11.50) All going as planned Rating and valuation. We reiterate our BUY recommendation on RCG Holdings and set a new target price of HK$15.00, vs. HK$11.50 previously, as we roll forward our valuation models to FY10. This new target price is marginally above our FY09e book value of HK$14.3 and represents 4.8x FY10 EPS and 4.2x FYEPS. This valuation includes an FY09e net cash position equal to HK$2.50 per share. "Good visibility into 1H10. A recent call with management confirmed this positive momentum had continued in 2H09, throughout all business segments. Moreover, the current order backlog points to continued double digit revenue growth for RCG into the first months of FY10, implying the company offers good visibility for 1H10. We expect that both new contract wins in Solutions Projects in China and Malaysia as well as new product roll outs in the Consumer and Enterprise segments will contribute. In addition, given its recent HK$189m fund raising, RCG should end FY09 with a net cash position of HK$682m. We expect this will lead to new acquisitions next year. "

RCG have been performing well recently, yet the current 86p share price is a P/E of just 2.86 assuming RCG make 30p EPS this year. The upside here is anything up to 300% - and even this would be a p/E of only 11.6. Whereas on a P/E of 2.9 the downside is say a maximum 25%-30%, even with an earnings downgrade in the unlikely worst case scenario. No wonder the share price has been rising - any issues over the Nina Wang shareholding are more than priced in at this rating!

Now this should get people excited. Remember that Jiangsu Shuangdeng are CHNS' main operating subsidiary. CHNS' is up this morning, yet is still on a P/E of just 4.5. Having such growth prospects for its core telecoms business with all its other potential in wind power, solar power, electric cars and bikes etc in for free is just ridiculous imo. This article from last week talks about the huge potential for energy storage systems in wind power, solar power etc - $14.6 billion by 2015 in China alone. And the article (well worth a read) concludes: http://news.alibaba.com/article/detail/business-in-china/100182807-1-pent-up-power.html "Pent-up power Published: 13 Oct 2009 09:02:01 PST" "The off-grid market is government oriented, Chen noted, and predictably government recommended brands such as Zhejiang Tianneng and Jiangsu Shuangdeng have a greater advantage over others."

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.

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.

A new article on VLE out today: http://www.fool.co.uk/news/investing/company-comment/2009/07/30/cash-for-sale-at-a-discount.aspx As I say in the comment below the article, VLE's £20m cash compares to a £13.6m m/cap! There's almost 50% upside on that alone. Not only that, but the operating businesses of IPT and Sira Defence are both doing extremely well, as outlined in the recent AGM statement. If IPT and Sira are valued at £4m as above, that brings VLE's sum of the parts value to around 430p, against the 240p share price. The interims will be out in September and judging by the AGM statement may provide more encouraging news.

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