A digital makeover for a country the size of China doesn't happen overnight. The Middle Kingdom has around 200 million households with cable subscriptions, and local broadcasters won't put a digital-signal unscrambler in the last cable box until 2015.
That slow process hides the outsized market for those smart cards -- which means that you can get shares of card builder China Digital TV
In the U.S., the digital TV switchover was a boon for electronics retailer Best Buy
Drawing a bead on the Chinese markets for consumer electronics and home-entertainment retailers is tough to do from over here, because we can't just hoof it down to the nearest strip mall to get a feel for how it's going. I wouldn't know whether plasma sets from SVA Information Industry are outselling panels from NIVS IntelliMedia Technology Group
But China Digital TV holds a better-than-61% market share of those all-important smart cards, which makes it a terrific proxy for the entire digital switch. And the thunder has already started to roll. This stock is a Rule Breaker for a reason.
In the just-reported first quarter, China Digital saw sales jumping by 37.7% year over year to $19.3 million. A heart-stopping 44% of sales fell all the way down to the bottom line as $8.5 million of non-GAAP earnings, or $0.13 in terms of GAAP earnings per original or depositary share. That's the kind of high-octane growth we're talking about here.
China Digital TV's low overhead costs left the company wondering what to do with all the money coming in. It decided to pay a two-part special dividend of $2, which puts high-yield champions Chimera Investment and American Capital Agency to shame. And for you dividend lovers out there, I wouldn't be surprised to see the special dividend repeated, in order to share more excess cash in the next few years.
This might be the easiest bet on China's emerging middle-class spenders today. There are other ways to invest in that trend, though; for example, you can find out more about a Chinese consumer brand that's set to challenge Nike on the global stage by grabbing this free report. The Great Wall doesn't look like a barrier to business anymore.