Investor's Champion Blog
Provides refreshingly forthright, independent comment on predominantly small cap companies and specialist investment funds. Informed opinion, based on first-hand research, but pulls no punches in exposing management weaknesses.

RC Group - another great announcement, but I'm still not sure exactly what they do!

RC Group the Hong Kong based provider of integrated biometrics and RFID security solutions issued a very positive trading updating today stating that the second half of the year had been strong and as a result it anticipated that its results for the twelve months ending 31 December 2006 would be significantly ahead of market expectations.

Apparently stronger than expected sales have been driven by recently introduced biometric access products and software, with the markets in Southern Asia and Middle East expanding particularly fast in the second half of 2006.

As a result the house broker upgraded its previous full year 2006 and 2007 sales and profit estimates by over 10%.

The share price is up over 150% over the last few months following a series of strong trading statements and now stands at c105p resulting in a markey cap of juts ovedr £200m.

According to the house broker the upgraded earnings momentum still leaves RC on an estimated P/E multiple of no more than 11x.

My congratulations to RC on seemingly delivering the goods yet again, but I have to admit that even after having met with the company several months ago and having watched one of its promotional videos I am still no clearer to really understanding its products, market and the reasons for the meteoric growth.

Dr Raymond Chu, who according to the Group’s website is a solicitor who had ‘garnered 20 years' experience in property and corporate finance matters’ prior to founding RC, has done a great job in growing the business. Corporate finance and property clearly provides a good grounding for biometrics and RFID security!

I’m not sure whether to cut and run now, when I am still winning, or whether I should try and devote a little bit more time in an attempt to really understand the business and its market.


Investor's Champion is a registered trade mark of Investors Champion Ltd.  Investor’s Champion Limited is a company registered in England and Wales under number 03577867 whose registered office is at Langwood House, 63-81 High Street, Rickmansworth, Herts WD3 1EQ. Investor’s Champion Ltd is associated with Fundamental Asset Limited who is authorised and regulated by the Financial Services Authority.