China Shoto, first recommended by Growth Company Investor at 200p in 2006, offers investors good growth prospects over the medium to long term.

Calendar 2007 numbers confirm this, with sales increasing by 81% to £107.5m, pre-tax profits growing by 58.7% to £7.2m and management recommending a final dividend of 4.5p per share. The sales surge reflected back-up battery sales to the telecommunications market, including China’s six major telecoms operators, although sales of the group’s power-type batteries for electric bicycles also increased strongly.

Looking ahead, the company believes that two key events will give it a ‘huge market opportunity’ this year: the introduction of ‘third generation’ mobile telecoms technology in China and the Olympic Games, which is driving demand for both mobile phones and mobile phone network use. Broker Seymour Pierce is confident that growth at the business will continue to be driven this year by continued strong demand from telecoms operators investing in 3G infrastructure and has upgraded its profits forecasts.

This year, investors might expect increased net profits of £6.4m (2007: £5.7m) and earnings of 26.6p (2007: 24.8p), ahead of 29.9p next year. Trading on just 5.6 times prospective earnings for 2008, the current share price looks too low. Buy.

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China Shoto	AIM	£21.01m	90.00p	0.00p
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Other company articles:
China Shoto			24/04/2008
China Shoto			23/04/2008
Seymour Pierce			01/04/2008
China Shoto			13/03/2008
Seymour Pierce			30/10/2007