S-share bargains: DMG & Partners

DMG & Partners have identified a few fundamentally strong S-shares which are trading at attractive valuations – low P/E, high ROE and steep discount to peers (see table).

In a five-page report dated Feb 21, DMG noted that China stocks have taken a huge beating since their peak in October 2007, with many stocks losing over half their value.

There was a flight to quality as the global economy started to wobble, it noted.

Many are bargains now, and have attracted attention.

”With S-shares falling below 10x P/E, investors have started to notice this group of typically high growth stocks, which has rallied over 10% within this month.”

One of these is FerroChina which, b
ased on consensus estimates, is currently trading at a mere 5.0x prospective P/E, which is less than half of its regional peers (11.2x), noted DMG.

With a market capitalisation of more than S$1billion, it boasts also of strong earnings indicators like an ROE of 39.2% (highest among its peers), and a turnover and net profit CAGR of 80.8% and 57.1%, respectively, between FY04 and FY06.

For the full report, click here.


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LIZHONG WHEEL now at only 5.5x PE for this year: Phillip Capital

Image
Semi-finished or finished wheels moved efficiently from one part of the Baoding factory to another via ign="top" style="border-right: windowtext 0.5pt solid; padding-right: 0.75pt; border-top: #d4d0c8; padding-left: 0.75pt; background: white; padding-bottom: 0in; border-left: #d4d0c8; width: 58.8pt; padding-top: 0.75pt; border-bottom: windowtext 0.5pt dashed; height: 19.5pt">21-01-2008 250,000 1.634408,500 18-01-2008 400,0001.7072682,880 17-01-2008 500,0001.709854,500 16-01-2008 500,0001.9013850,650

 

 

 
























Along with the broader market, China stocks have been dumped in recent months by the market but some of them are being bought back by their companies or by major shareholders who, presumably, see value in them at those prices.

Sino Environment has been one of the most aggressive in buying back its shares. To date, since it started its buy-back scheme on Jan 16, it has bought back S$6.8 million worth of shares.

Its stock price has fallen sharply since the first buy-back on Jan 16 at around $1.90. Recently, it was trading around the 73-cent level only.

Sino Environment’s n
et profit increased 88% from RMB 91.2 million in FY2006 to RMB 171.2 million in 2007. Earnings per share was 42.98 RMB cents, or 8.59 Singapore cents.

At the recent stock price of 73 cents, the historical PE is 8.5.
 
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YANLORD chairman buys company stock

BuyerDate of purchaseNo. of shares purchasedAverage price/share
(S$)
Total value (S$)Total shareholding
Yanlord Holdings14-03-2007  360,000  $1.8801,425,9001.273 billion  (69.73 %)
 13-03-2008  600,000$1.9221,800,000 









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Chairman Zhong

Yanlord Holdings, the investment vehicle of Yanlord Land Group chairman and CEO Zhong Sheng Jian, has snapped up
$3.2 million worth of company stock from the open market.

For FY07, net profit of Yanlord Land, which develops high-end residential properties in the PRC, rose 30% to RMB 221.5 million. Net asset value as at the end of last year was 84 cents a share.
 
                                                                                        
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CHINA NEW TOWN substantial shareholders on buying spree

BuyerDate of purchaseNo. of shares purchasedAverage price/share
(S$)
Total value (S$)Total shareholding
Sinopower Investment13-03-2008  700,000  0.2779  194,530 636 million   (45.4%)
 11-03-2008  500,000  0.2974  148,700 
 10-03-2008  600,0000.2875  172,500 
 07-03-2008  1,000,0000.30300,000 
 06-03-2008  600,000  0.315189,000 
T. Rowe Price Associates18-01-2008  4,350,000N.A. N.A. 129,510,400  
(9.24 %)
 19-12-2007  4,274,000N.A. N.A.  
 14-12-2007  3,950,000N.A. N.A.  
 03-12-20077,058,000  0.636  4,488,888 


The major shareholder of China New Town Development Company, a leading new town developer in the People’s Republic of China, has stepped up its purchase of the company stock in recent weeks.

Sinopower Investment’s buying spree follows hot on the heels of fund manager T.Rowe Price Associates, which bought in December 2007 and January 2008 at higher prices.


For 2007, China New Town achieved revenue of RMB 363 million (S$71 million) and suffered a net loss of RMB 287 million (S$56.3 million).

The loss was due to a one-off non-cash accounting loss of RMB 194 million (S$38 million) resulting from the revaluation of pre-IPO convertible bonds, as well as a significant delay in revenue recognition from land sales.

Recent NextInsight story: The Great China Sale

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