ferrets stock to watch: sino strategic internation

Ferrets Stock to Watch: SINO STRATEGIC INTERNATIONAL
08:38, Thursday, 21 December 2006

THE NAME OF THE GAME IS TO GET INTO THE CHINESE MARKET


Sydney - Thursday - December 21: (RWE Aust Business News)

********************************


OVERVIEW

********

Australians know all about "Made in China" as it becomes our
biggest trading partner on the way to displacing Japan.

But what we are not as familiar about is the Chinese addiction
to all forms of gambling.

We have read all about PBL and the Ho family of Hong Kong getting
together to expand in Macau.

But there are a lot of Australian service companies already in
the Chinese market that are rarely heard of.

Sino Strategic International (SSI) is one company that is
building up a profile in the Chinese gaming market.

The company is described as a diversified investment holding
company with interest in gaming, internet & mobile media, pharmaceuticals
and investment services.

Yesterday Sino Strategic announced it has signed agreement with
Playtech Ltd, an AIM-listed international designer, developer and
licensor of software for the online and land-based gaming industry.

The deal is for a landmark five-year software licensing
agreement.

Playtech and SSI will be the first major distributor and
promoter of Texas Hold'em Poker in the Chinese market.

Following the launch of the poker product in the coming months,
SSI expects to launch a selection of Playtech-powered P2P Chinese
tournament games through selected SSI outlets in China in the first half
of 2007 after a testing, approval and implementation period.

Initially, a selection of P2P poker games will be offered,
followed by games played more common in China such as Mah-jong, Do Di
Zhu, Cho Da Di and To La Ji.


SHARE PRICE MOVEMENTS

*********************

Shares of Sino Strategic International yesterday climbed 17c to
$2.31. Rolling high for the year was $5.59 and low $1.85. The company has
30.6 million shares with a market cap of $70.7 million.

At the annual meeting in late November, chairman Man Ban Lee
outlined to shareholders the exciting developments that have occurred
over the last 12 months.

Plans to become the dominant gaming presence in Shanghai and
then to expand our operations nationwide, are becoming a reality.

"Today we have 420 Point Of Sale (POS) outlets in Shanghai and we
anticipate having 500 opened by year-end," he said.

"Weekly sales have been steadily climbing and now exceed 1.3mRMB
per week.

"These outlets sell Keno, Lotto and a popular Chinese lottery
called Shishile or 3 Digits.

"We are extremely pleased with this rapid roll out and growing
sales figures particularly as hurdles have been encountered, as you would
expect, along the way."

Meanwhile equipment failures from a third party provider
impacted sales and store openings.

All faulty machines have now been replaced with machines
that can handle multiple products and are functioning normally.

At the same time management has a continual program of replacing
poorer performing sites with better locations.

In October by mutual agreement the license agreement with
Shanghai Welfare Lottery Centre (SWLC) was amended to 600 Keno and 300
other licenses with the permit term extended to 5 years," the chairman
said.

"This extension of term confirms our strong relationship with
SWLC with both parties keen to maximize the sales revenue and value of
the POS franchise.

"The agreement with SWLC has been further improved by reducing
the level of deposits required for each store opening.

"Management are focused on continuing the rapid rate of store
openings, optimising the locations of stores, developing programs to
drive more traffic to stores and sourcing further games to be sold
from the stores.

"These activities will improve average store sales while
increasing overall sales.

"It is expected that television broadcasting in China will become
digitised in the future and sports betting is expected to be launched
across China within the coming one or two years."

The ability to access licenses for outlets in the form of movie
bars which can provide real-time digital transmission of sporting events
over screens will be necessary to take advantage of this significant
business opportunity.

Endless Idea, a subsidiary company of China Entertainment
Holdings Limited (CEH) holds the contract with Shanghai VSAT (Virtual
Satellite) for developing content for the Lucky Channel and for movie
bar/mini cinemas.

These operations have significant potential in their own right and
as a logical addition to the gaming entertainment to be accessed within
MEC outlets.

CEH has developed an Internet Proxy Betting portal known as
www.kenogames.cn to handle Proxy Betting for 3D lotto game, a game played
every 30 minutes, for its customers.

The management of SSI intend to focus its efforts on its core
gaming business that it has the permits and licenses to operate, whilst
maintaining a close relationship with the relevant authorities in China
to ensure that as and when additional forms of gaming are allowed.

It will be able to provide these offerings via its existing or
new outlets.

The company is already carrying an extended gaming offering from
its outlets including lottery, keno and VLTs.

This substantial POS network managed under Shanghai Kelo is
already amongst the largest retail chains in Shanghai which can be used
as a sales platform for complimentary products and as a valuable
advertising medium.

It has recently completed a successful trial of tournament P2P
gaming and anticipates releasing further P2P games within 60-90 days.

CEH is in discussions with the world's leading gaming software and
technology providers to be able to offer an integrated gaming platform
that would constitute an effective one stop shop of gaming offerings.

Through the early implementation of an integrated, flexible
platform, CEH will be able to ensure that as and when the Government
allows it to offer additional forms of gaming, new products can be
swiftly offered with minimal delay and little additional capital outlay.

In conclusion, whilst the People's Republic of China has
traditionally adopted a hard line stance towards gaming, the financial
benefits to the government of a regulated regime in a nation where
illegal gambling proliferates, are potentially vast.

Accordingly, SSI sees the gradual relaxation of the market being
likely to continue under the auspices and control of the various lottery
organisations within China and the supervisory authorities.

SSI is strongly positioned to benefit from this trend which will
provide a revenue stream for the government and through revenue sharing
arrangements, a superior return for our shareholders.


BACKGROUND

**********

Sino Strategic International Limited (SSI), a company listed on
the Australian Stock Exchange since 1987, was a pioneer in developing and
introducing Chinese companies to the Australian equity market.

The company currently has three directly managed main businesses:
investment banking and stock brokerage; Chinese herbal medicine; Gaming
and Entertainment in China.

These latter activities are conducted through China Entertainment
Holdings Limited (CEH) a wholly owned subsidiary of SSI.

SSI merged with CEH in 2005.

This development transformed the company with the Chinese gaming
opportunities available to CEH becoming the main business focus and
potential for the company.

SSI's Chinese gaming operations are conducted through CEH.

Managing director of SSI is Cheng Chee Tock (Teddy), who is
a well-known entrepreneur in China, through his wholly owned investment
company Best Winning Investment Limited.

He is the single largest controlling shareholder of the company.

SSI also holds a controlling 51pc stake in another ASX-listed
company, GoConnect Ltd (GCN).

GCN is an Internet and mobile media and communications company
engaged in IPTV, Voice Over Internet Protocol, online and mobile
directory search, and online advertising and media sales businesses.

ENDS

Copyright © 2006 RWE Australian Business News. All rights reserved.