Reo has provided a very good summary of proceedings but as I was part way through mine I'll keep going especially as I have taken a different perspective.
First a bit of background. As most will be aware the leadership of the Chinese Communist Party changed today. This is a major event that only happens once every ten years or so. When it does happen heads roll and others get promoted. So, in the lead up to the event everyone is being ultra careful to make sure that they have followed procedures. In the case of a foreign company like SMA the rules aren't necessarily well defined so people tread even more carefully. As a result decisions are made very carefully and not in haste. However it's not all over yet. The next big thing is the National Peoples Congress in March next year when the lower echelons are assigned their positions under the new administration. Effectively, the Federal Government has just changed and all the state and local governments will change in March.
So for a business trying to make progress with the various bureaucracies at the present time things can get pretty frustrating. This explains why there is so little momentum.
On the plus side the Company has in place a variety of agreements (as people should be aware) that have laid the ground work for future income. This income is beginning to trickle through but is still small. Interestingly we were advised that SmartTrans receives 5-7% of wagered revenue in the lottery applications. Given that the Company has the sole right to provide the V1 Lottery Application to China Mobile's 638 million (and rising) customers this is not an insignificant percentage. However, contrary to what one might expect the lottery application has to be promoted in order to gain traction, hence the capital raisings. On the subject of sales revenue it was explained that the recent marketing campaign took a lot more effort than one might expect. Approval has to be gained to run the sales campaign and then approval has to be gained to ratify the results all of which takes time and patience.
As Reo has pointed out we shouldn't expect any significant improvement in the short term but the potential is there for the longer term. A note of caution: like any Company breaking new ground, the Company cannot be guaranteed to survive its teething problems so it's still an investment that's not without risk or future capital raisings.
On the subject of mining leases, all options are being considered but there is no change to the current situation for the present. Why does the Company report as a mining company? Apparently that is decided by the ASX.
Once again, thanks to REO for an excellent report.
SMA Price at posting:
0.6¢ Sentiment: Hold Disclosure: Held
