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China Shoto misses by a mile - warning from China
Posted 21/01/11
Having issued 2 disappointing statements in 2010, the Chinese battery producer has opened 2011 with yet another disappointing announcement covering trading for the year ended 31 December 2010.
Further to previous announcements the Company has reaffirmed that it has experienced “challenging trading conditions”.
A substantial decrease in the levels of investment made by the three major Chinese telecom operators, to which CHNS is a leading supplier, is expected to adversely affect the Company’s financial performance for the year ended 31 December 2010.
The Government fuelled spending of 2009 has slowed and competition has increased, both of which has contributed to a decline in gross profit margins compared to the prior year ended 31 December 2009.(Gross margins Dec 2009: 23.09%; Dec 2008 23.3%)
Although the trading performance did improve during the second half of the year they now estimate that net profit for the year ending 31st December 2010 will decrease by approximately 30% when compared on a year-on-year basis to the previous financial year.
Pre-tax profit for the year ending December 2009 was £11.55m and analyst estimates for 2010 appeared to be for pre-tax profit of £16.1m and earnings per share of 59.70p.
Maybe I’m misreading things but with December 2009 net profit £10.3m a 30% fall suggests net profit of approx £7.2m and therefore massive miss if estimates were for pre-tax of £16.1m or net profit of approx £14.5m!
The valuation based on historic numbers and forward estimates might look dirt cheap but surely investors are looking at China for sustainable growth?
This entry was posted 1 year, 3 months ago.
