Excerpts from latest analyst reports....
NRA Capital, after company visit, says CHINA MINZHONG ($1.41) is a "compelling story, but...."
Analyst: Lee Khai Chian
EPS forecast for FY11 and FY12 on the street are RMB1.0 and RMB 1.32 respectively, reflecting high expectation of robust growth and solid fundamentals.
This works out to be 5.7x FY12 PER. The valuation is not steep, but is relatively higher than its peers due allegedly to greater transparency and better corporate governance.
The share price made an impressive run, from the ipo offer of S$1.20 to the peak at S$1.90. Share price, however, failed to make a new high despite a better-than-estimated 4Q numbers (PAT up 93% yoy).
Price plummeted to S$1.38 after pre-ipo investors trimmed their stakes in the company.
We feel that any positive earnings surprise could be overshadowed by share overhang. Additionally, MINZ’s internal resources might not suffice to finance the expansion plan. Management might resort to equity market for additional funds as banks in China are less willing to lend nowadays.
Related story: YAMADA Visit: Mushrooming Sales, ‘Unlimited Growth’, 1.6x P/E... What Gives?
Asiasons WFG Research says CHEUNG WOH is presently valued at 4X FY12 earnings only
Company Review - Cheung Woh believes that its Automotive and Precision Metal Stamping components segments will continue to do well.
Quantity to be produced for the HDD components segment will be reduced slightly due to upstream electronic components and material supply chain disruption caused by the Japan earthquake.
However this segment will remain profitable. The Group believes the situation will improve gradually in the near future.
Our view: According to Bloomberg consensus, Cheung Woh is presently valued at 4.0x FY12F P/E.
We note that this compares favourably with its historical average of 12.8x P/E in the last 5 years.
Additionally, Cheng Woh is also trading at 0.75x FY12 P/B and this is similarly lower than its 5-yr historical average P/B which is 0.81x.
Recent story: CHEUNG WOH TECH: FY2011 revenues up 21.9% at S$151 million
AmFraser says CHINA TAISAN's fair value is 25 cents
We visited China Taisan Technology Group Holdings Ltd (“China Taisan”) recently at their Fujian factory.
We believe the Group is in the right segment at the right time with performance fabric manufacturing poised to benefit from robust demand.
We therefore highlight the stock with a BUY recommendation and fair value of S$0.25.
This represents a 78.6% premium over the last close price of S$0.14. After studying their listed peers on the SGX and HKEx, we peg a 7x P/E valuation on their FY2011E earnings of 3.6 SG cents to arrive at our fair value.
Key risks
1. Fall in consumer demand. Consumers may reduce discretionary purchases of higher-end apparel in the event of an economic crisis.
Changes in fashion trends will also affect consumer demand for China Taisan’s products.
2. Cost pressures. Material costs such as that of PET chips has been increasing since Feb 2009. High volatility in PET chip prices since Oct 2010 further made planning difficult and squeezed margins.
Recent story: CHINA TAISAN: On track for a strong rebound in 2010 profit
