Kevin Scully, executive chairman of NRA Capital. Photo: CompanyThis article was recently published on www.nracapital.com, and is reproduced with permission.CHINA ANIMAL HEALTHCARE (CAH) was delisted from the SGX in August 2013 with an exit offer price of S$0.30.
At that time, CAH shares were trading at about HK$2.50......they have since risen to above HK$5.00.
CAH was one of my recommended stocks before its delisting.
Is the share price justified? I have not followed the stock closely since its delisting from the SGX.
Bloomberrg chart above shows the stock price movement of China Animal Healthcare on the HK Exchange: The stock has soared to HK$5.00 recently from HK$2.01, the price it was at when CAH announced its 30 SGD cents offer to delist from Singapore.Looking at Bloomberg data at the current price - China Animal is trading on a historical PE of 58 and a prospective PER of 38.
They recently announced an acquisition in Mongolia - with the target valued at 20 times earnings.
If these numbers are correct, the share price in term of historic and prospective PERs appears very rich.
A quick check with Bloomberg in terms of analysts forecasts show one research firm saying its worth HK$5.50 on 2015 earnings but most saying the target is just around HK$4.00.
I don't know how Hong Kong or China investors value stocks but assuming the Bloomberg forecasts are correct, the share price appears to be more than fully valued and some profit taking is probably warranted.
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Comments
And it was an S-chip shunned by Singaporeans. This S-chip is one of the golden stocks in my portfolio currently due to its outperformance on HKSE.
Tells you a lot about the difference in Hong Kong Stock Exchange and Singapore Stock Exchange.