RCG is the world's most profitable and fastest growing pure biometric and RFID player. The leader in Asia, making huge strides in China and dominating in South East Asia and the Middle East, RCG has racked up a CAGR of 75% annual sales and earnings growth over the last 4 years.
The valuation remains pitiful due to a large shareholding in dispute in the contested will of Nina Wang, a very colourful HK billionaire who died suddenly last year. She owned 27% of the company and left it in her will to one of the Chan brothers who's other brother owns another 23% of RCG and this has led to investor worries - which to me reek of xenophobia. By all accounts there should be a resolution within the next 6 months, which many believe will coincide with an introduction onto the Hong Kong market by way of introduction. A resolution has been passed in a recent EGM that the introduction must occur before the AGM next May. At the very least, this gives Chinese and Asian investors a chance to buy into a company that has been racking up brand awards and contracts throughout the region, and with the AIM valuation so pitiful at barely 2 times current year earnings this should at the very least lead to strong support.
Dr Raymond Chu (CEO) is a fascinating fellow, something of a maverick - immensely well connected in Asia, educated in Bristol, and to many something of a wild card. The only mistakes that he's made in my book are in the realms of investor relations, cutting a dividend unnecessarily, and engaging in strange funding practices, but it can never be levied that he is spendthrift. An average cash balance of £20m+ over the last 2 years has been spent only when opportunities have arisen, and operating cashflow has been ramping up significantly to take it's place.
The RFID and biometric market is growing at a CAGR of 35%, and government contracts have been growing swiftly. Recent disasters at Heathrow Terminal 5 have thrown the spotlight on the seamless baggage handling system put in place by RCG at Beijing, and the company's solutions business goes from strength to strength - from airline terminals to ticketing and security at stadiums - the applications of the technology are widespread. On the consumer level, RCG has shown constant innovation from notebook security…
