The Jackpot is Waiting

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The Chinese Government is opening up the lucrative gambling market. Participating profit with the China action.

On stage, two Shanghai youths produce raucous Chinese pop music. Suddenly a group of young Chinese girls sing out, "We've won with Keno". Every five minutes the 10 of 80 numbers of the Keno casino show are drawn. On the brightly coloured board above the stage the winning amounts are shown.

Keno outlets in Shanghai are growing like mushrooms. The State Welfare lottery has issued 1,000 licenses.

The enduring Sino Strategic International Ltd ("SSI") should be a substantial beneficiary. In spite of the doubling in SSI's on market value since the first Focus-Money recommendation SSI presents excellent opportunities.

For investors, SSI is likely to offer the best opportunity to participate in the dynamically increasing Chinese gaming market.

Strong Position

"In fairness we should have been granted 50% of the issued licenses", according to SSI Chairman and majority shareholder Teddy Cheng. "But they did not have any other suitable companies therefore we received 750 licenses" claimed the politically well connected millionaire.

Meanwhile SSI has already opened around 100 Keno and gaming outlets in shopping centres, bars and free-standing shops. We estimate around 10,000 RMB (1,050 Euros) average turnover per day, says Richard Li, Managing Director and part-owner of SSI.

Approximately 7% of takings are charged as royalties. Only allowing for this activity should produce an annual 20 cents per SSI share, which would justify the current SSI market price.

50 Billion market

The "Rockefeller from China" according to his partner, Richard Li, is however not satisfied with Keno in Shanghai. "By 2008 we want at least 25% of the Chinese gaming market", is Cheng's goal. To realize his aim in the 50 billion (Euros) gaming market SSI will have to attain Keno and Lotto licenses in other Chinese major cities. Cheng's connections will almost certainly produce positive results in this context management plans to go further. In the future SSI wants to install poker machines in its outlets. The Shanghai Welfare Lottery Agency is likely to issue about 2,000 licenses. Li counts on a market share of 60%. "We will surprise the market with amusement centres in the top locations" according to Li. SSI intends to establish these small poker machine venues nationally as well. With a daily turnover of 100 Euros per machine and outlets in 15 cities this again could produce a minimum of 20 cents per SSI share.

Lucrative Sports Betting

Sports betting could well become the icing on the cake. SSI currently seeking a national license. Even if another consortium gains a license, SSI will still profit. The in-house satellite, Lucky Channel is the only broadcaster who can report on lotteries and sport lotteries betting. All in all the still speculative SSI shares could in the long term be more than 20 Euros if Cheng's and Li's plans are realized. Then the SSI shareholders will themselves sing on stage.

Set Limits.

Translation of Focus-Money article titled: "Der Jackpot wartet" by Johannes Heinritzi.

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