The only running thread among these businesses seems to be that they are focused on China. What area of technology is the new MultiVision looking at? "To be honest, one thing we feel uncomfortable about is we used to rely on [only] one source for turnover," Gao says. Margins from the sale of its digital video surveillance equipment had started to come under pressure amid mounting competition - hence the company's current strategy of diversifying and focusing on niche businesses to evade competition.
But this business model also has a kink in its armour. Dependence on China means the company has to endure high trade receivables. Indeed, its second-quarter (2Q) cash statements showed a sharp rise in trade receivables. Tso concedes this is a problem, at least for its equipment-supplying business with China-Vision. For the Beijing city surveillance project and BTI, however, the company is likely to get paid before or soon after delivery, he says. High receivables are another reason the new team is trying to steer the company towards selling not just equipment, which are one-off projects, but also providing services like installing and maintenance, which generate more predictable recurring incomes.
One analyst says he has met with the new management but is in no hurry to change his recommendation because the BTI lottery business appears "unexciting". Two analysts have "hold" recommendations, with price targets between 15 and 17 cents. As for the special dividend, Gao says the company will announce the amount in its 3Q-to-December 2005 results announcement, scheduled for early February and it will be paid out before March.
For FY2006, investors are likely to see a drop in operating profits because its former core business of digital video surveillance, which typically adds between HK$8 million and HK$10 million every quarter, will stop contributions in the final quarter to March. The exceptional gain from the sale is likely to compensate the drop, however, leading to a better FY2006 net profit. "Overall, we will still report a profit attributable to shareholders," Gao says. Investors are also likely to wait and see how this company develops in FY2007.