Shares digital

BlueStar SecuTech (BSST:AIM) – Finals PTP: Rmb 53.5m (Rmb 45m) Divi: n/a (n/a)

Even though the Chinese authorities delayed full conversion of last June’s £11.1 million flotation proceeds into local currency, the digital video surveillance expert still delivered rapid earnings growth and met analyst forecasts. Now all of the cash has been converted, the £27.3 million cap is eyeing expansion into new sectors and international markets.

BlueStar SecuTech, which is based at the Zhing Guan Cun Science and Technology Park in Beijing, supplies digital video recorders (DVRs), network monitoring platforms and remote control systems.

It has so far focused on its domestic market and has specialised in the banking sector. This has given the firm a target market of 270,000 bank branches and ATMs. Of China’s leading 25 banks 18 are already customers. Chinese legislation insists on each ATM having its own camera, which is in turn connected to one DVR unit, and on a five-year replacement cycle to avoid obsolescence.

New board member Romeo Kwok has just been given responsibility for developing BlueStar’s international strategy and sales team. The company also has plans to deploy its expertise in areas beyond banking.

‘We are looking at non-banking markets too, potentially by acquisition,’ confirms non-executive director Jeff Teo, who is also a non-executive director at fellow Chinese technology stock Sinosoft (SFT:AIM). ‘Systems integrators are already in the telecom, petroleum and chemical sectors, which have similar characteristics to banking, as they are driven by [regulation from] Beijing,’ he adds.

The shares of BlueStar SecuTech rose 6% to 37.5p, although this is still below last summer’s 48p issue price.

Shares says: A prospective PE of barely seven is attractive given the growth profile, even if acquisitions and international expansions have their risks.

by: Russ Mould