Bluestar Secutech Share Discussion Threads

[longsight] 23/6/2010 14:49

Mas - they do not have positive cash flow. I agree they do have a big cash cushion but if they can't cut debtor days then if they expand the business further they will soon eat up the cash. It is not true that all Chinese businesses suffer from this problem. WCC has quite good cash collection. Chaoda Modern has debtor days of just 30 days [from memory].

This remains the biggest reason, imo, why investors aren't committed to this share. I hasten to add that in the case of RCG, I have repeatedly identified lousy cash flow / debtor days as the biggest constraint on the business. With BSST, the situation is worse i.e. beyond the pale. It is ironic that most of their customers are Banks since BSST really act as a bank to their customers. The reason the shares did not respond to the police stn contracts is because of course they will pay just as slowly.

ELBAN, for once, has called this one right.

[masurenguy] 23/6/2010 14:09

They could strive to improve them as Geong has previously done except the latter was probably helped by diversifying into other non-banking sectors.

I doubt whether Bluestar could sustain debtor days of much less than 250 days as an optimal target, outside of the Oct - Dec quarter, since that is the culture of Chinese banks. I don't like these debtor day ratios either but it doesn't bother me since they have plenty of cash, have a positive cashflow, are debt free and regularly pay an annual dividend. The debtor situation might improve when they get a new CFO on board. However, if you're waiting to see a significant improvement then don't hold your breath and I doubt if you'll invest if that is your criterion.

With a current yield of 3.25% and a shareprice that is also up over 50% since the begining of this year, I am more than happy to hold and to add on weakness !

[elban] 23/6/2010 13:00

Not a shareholder,

I would consider buying though - if the debtor days improved significantly.

It seems that, at times, they must be over 1 year -- which is just inexcuseable.

[elban] 23/6/2010 11:58

Masurenguy - 23 Jun'10 - 08:40 - 823 of 827

Cash collection in China appears to be optimised during the October to December quarter particularly where the customer base is largely composed of banks !


That's not exactly reassuring since the report period ended just 3 months after this 'optimal' collection period.
It would thus appear that the debtor days should increase significantly from the awful 334 days until payments roll in starting October 2010.

[masurenguy] 23/6/2010 09:09

Last year they issued a Dividend Timeline a week after they published their results. The dividend was paid on July 31st last year.

[zangdook] 23/6/2010 08:55

No mention of dates for the dividend.

[bill182] 23/6/2010 08:50

boadicea, the payment cycle from the banks has been well documented, which I guess is the reason for wanting to diversify their sales. The increase in the R&D which will culminate in the launch of new products next month should balance itself out, and I would expect to see good revenue and profit growth over the next 12 months.
The increase in dividend by 68%, is very welcome, and whilst the rise in debtors is a factor, the mkt cap currently of £19m, versus the NA's of £26m, IMHO seriously undervalues the potential of this company.

[masurenguy] 23/6/2010 08:40

Cash collection in China appears to be optimised during the October to December quarter particularly where the customer base is largely composed of banks ! Geong also has that issue although it will be interesting to see how their debtor days compare when their results to March 31st are issued next week.

[boadicea] 23/6/2010 08:25

The company appears to be doing very well.
The main negative factor is the debtor days which, on a crude basis of debtors/revenue, have increased from a very high 291 days to an even higher 334 days. The small operating cash flow is eaten up by investments in product development etc resulting in a cash outflow of Y11.8M.
If they could have held the 291 day figure there would have been a net inflow of ~Y10.8M.

This is a simplistic analysis as is doesn't take into account the delivery profile over the year which may be seasonally weighted. However it is one of several causes of the typically low valuation given to Chinese co's on the UK market.

There is probably little cause for worry over the credit-worthiness of its customers and therefore the security of its debtor assets. It does however tend to limit the possible rate of expansion from internally generated funds and the current healthy balance is likely to be further eroded unless cash can be realised faster.

On this basis, the company looks a fair investment but unlikely to be a short term bonanza imho.

[bill182] 23/6/2010 07:49

Excellent set of results...we may even see a re-rating of the SP!

[masurenguy] 23/6/2010 07:16

Sales up 22% and eps up 54% at 4.25p and an historic PER of just 5.75. Net cash balance is equal to 10p per share and the P/EV IS JUST 3.4.
__________________________________________________________

RNS Number : 0714O
BlueStar SecuTech, Inc.
23 June 2010

Final Results for the Year Ended 31 March 2010

BlueStar SecuTech Inc. ("BlueStar", "the Company" or "the Group"), the AIM quoted (AIM: BSST) leading provider of digital video surveillance solutions in China, is pleased to announce its final audited results for the 12 months ended 31 March 2010.

Highlights for the year

• Revenues up 22% to RMB 192mi (2009: RMB 157m)

• Gross profit up 28% to RMB 99m (2009: RMB77m)

• Net profit up 53% to RMB31m (2009: RMB20m)

• Revenue from high margin software of RMB17m (2009: RMB14mn)

• Cash position of RMB73m at year end (2009: RMB85m)

• Dividend of 0.84p per share (2009: 0.50p per share)

Commenting on the results, Xiao Gang, Chief Executive of BlueStar said: "Despite the ongoing global financial crisis, the market in the second half of the year has picked up and signs of recovery were seen. As a result, trading for the 2010 financial year was in line with management's expectations. In the current financial year to date, we have further strengthened our market position and the business remains financially strong. The Company is still committed to its core strategy of developing video surveillance solutions for the financial sector in China, as well as expanding into other new business areas. The Board is confident about the Company's prospects and long term opportunities."

[masurenguy] 22/6/2010 18:46

Results tomorrow - should be interesting to see how close they are to prior projections. Outlook statement will probably be the key factor in terms of the likely impact on the share price !

[masurenguy] 17/6/2010 13:40

It is only marginally down and this is partially due to the spread narrowing from 2p to 1p plus one small Sell of 27,781 shares (below the Bid @23p) just before 1.00pm. It's rather meaningless and does not reflect on the fundamentals.

[bill182] 17/6/2010 13:11

I really can't work out what is going on with this share. On the back of positive news, the share price is currently down. With current NA's of circa £24m, of which there is circa £9m cash, the mkt cap is £19m.
We already have a very good idea of the results, so can someone explain what is going on?
The company appears to be doing all the right things, so I guess we will have to wait for the market to catch up!

[gelp] 17/6/2010 10:53

With you all the way on this Measureguy.
Have been for quite a time, like other Chinese shares.

[masurenguy] 17/6/2010 08:47

Already had a coffee thanks - just curious why you wanted to raise what appear to be non-issues on an interesting contract that still only constitutes probably less than 5% of this years likely sales. A contract win RNS does not usually comment on the likely receivable timescale or the anticipated gross margin that they expect to realise from it either.

[zangdook] 17/6/2010 08:37

Huh? I didn't say there was an issue, I just asked a couple of questions I felt they might have been answered in the RNS. Thanks for the general answer to the first question, I'd still be interested to know specifics.

Get a coffee or whatever it is you need.

[masurenguy] 17/6/2010 08:29

zangdook - why are you raising a 'cash and margin issue' ? At the interims the gross margin was up more than 10% from 50.5% to 56.5%5 and at the end of December their net cash position was circa RMB90m ! So why should there be any particular issue in relation to a RMB9m contract or the contract gross margin ?

[bill182] 17/6/2010 08:28

zangdook, excellent news IMHO. This contract could be the tip of the iceberg given the work they are already undertaken with the Police departments. The results which are due on the 23rd should also confirm the continuing improvement in the debt recovery position.

[zangdook] 17/6/2010 08:20

6 weeks work for RMB9m, but what is the margin and when will they get the cash?