RCG Holdings 802

RCG Holdings 802

Postby rforromeo » Wed Feb 25, 2009 7:56 pm

RCG Holdings Limited together with its subsidiaries is a leading and publicly quoted international provider of biometric and RFID products and solutions services with a primary focus on development and sourcing these products and solutions services from, and selling them in, the Asia Pacific markets. Particularly active in PRC, Malaysia, Gulf markets. Many are government contracts which will not be affected as much by the downturn.

From 2006 to 2007:
Revenues grew by 63% to HK$ 1,439 million.
Gross Profit increased by 66% to HK$ 719 million.
Profit before tax increased 62% to HK$ 456 million

1H 2008: Profit before tax: HK$322 million

Current Market Cap HK$2.42B (@$10.40/share, 25/02/09)
P/E 5.12 ,
Trailing P/E < 4


Recently acquired Vast Base Limited - already accretive to earnings.
Vast Base is a system integrator that operates in the Peoples’ Republic of China (“PRC”) and the Asia Pacific region from its offices in Singapore, Kuala Lumpur, Malaysia and TianJin, PRC. The company is involved in the provision of intelligent stadium solutions and more recently has successfully expanded its business into the provision of healthcare industry automation. Vast Base has secured major contracts for the design and supply of RFID tickets and tags, RFID enabled equipment, software and middleware to the event management and healthcare industry.

The Group continues to have a robust balance sheet with a strong cash position. Post-acquisition, the Group is projected to have cash and cash equivalent of between HK$250 million to HK$300 million, dependent on currency rates fluctuation.

Forecast by Frost & Sullivan, the RFID market for the regions in APAC, EMEA and North America are expected to grow at an average compounded annual growth rate of 28.7%, 23.7% and 29.1% in 2008-2012 respectively

Preliminary results for FY2008: Thursday, 12 March 2009 - If these come close to projections price should rise. In more normal times, a company with net cash on balance sheet, earnings growing at > 60% yoy could at least expect a P/E of 20, indicating a price > $50. When this "Great Recession" shows signs of abating (hopefully in a year or two) price could easily reach these levels.
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