Quality-Value Investing

Marc Melendez, CFA

Emerging Market Small and Mid Cap Equities

Reperio Capital

Reperio Capital Research was founded in 2013 with the goal of better serving the investment community with in-depth, high quality, value oriented research.

Reperio means to discover in latin. Using value investing principles, we aim to discover a minimum of 12 investment opportunities per year within the Emerging Markets Small and Mid Cap universe.

We take a business owners perspective with a long term investment horizon. We conduct bottom up, fundamental research. We focus on downside risks and require a significant margin of safety in any investment to prevent the permanent loss of capital. All factors differentiating our research from the short term, trading focus of traditional research providers.

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/17836" target="_blank" data-smartkarma-citation="entities:17836:1">Xingda Int'L (1899 HK)</a> is one of the largest steel cord manufacturers in China. It is consistently profitable due to its operational efficiency. It continually pays a dividend with no corporate governance concerns or obsolescence concerns. Its industry is experiencing cyclical weakness due to poor macro, overcapacity, rising raw material costs, and a lack of pricing power. These cyclical concerns are causing Xingda to trade near trough valuations.  
There are a number of ways for the operating environment to emerge from its depressed state. The Chinese government is attempting to decrease overcapacity in a number of industries, including the steel cord industry. Many smaller players are having difficulty generating profits and may have to shut down capacity. There also may be a turn in the macroeconomic environment or pressures from raw material prices may relent.
The base case earnings and asset valuation has a fair value of HKD4.51, which is 97.7% above Xingda’s current share price making it a very attractive investment. It typically does not take long for the cycle to turn. Historically, when Xingda hits multiples one standard deviation below its mean, it reaches one standard deviation above the mean in less than two years.

Xingda Int'L (1899 HK) is one of the largest steel cord manufacturers in China. It is consistently profitable due to its operational efficiency. It continually pays a dividend with no corporate governance concerns or obsolescence concerns. Its industry is experiencing cyclical weakness due to poor macro, overcapacity, rising raw material costs, and a lack of pricing power. These cyclical concerns are causing Xingda to trade near trough valuations.  
There are a number of ways for the operating environment to emerge from its depressed state. The Chinese government is attempting to decrease overcapacity in a number of industries, including the steel cord industry. Many smaller players are having difficulty generating profits and may have to shut down capacity. There also may be a turn in the macroeconomic environment or pressures from raw material prices may relent.
The base case earnings and asset valuation has a fair value of HKD4.51, which is 97.7% above Xingda’s current share price making it a very attractive investment. It typically does not take long for the cycle to turn. Historically, when Xingda hits multiples one standard deviation below its mean, it reaches one standard deviation above the mean in less than two years.

Xingda (1899:HK) 100% Upside Due to Cyclical Weakness

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

Value-focused bottom-up Asian equity research

NVB Asia Pte Ltd

<ul><li>China's car sales continue to increase annually and China's truck sales are on the rebound</li><li>All cars or trucks need tires and they need to be replaced frequently </li><li>Sales of trucks in China no longer driven solely by commodities but also by e-commerce logistics</li><li><a href="https://www.smartkarma.com/entities/17836" target="_blank" data-smartkarma-citation="entities:17836:1">Xingda Int'l Holdings (1899 HK)</a> is prime indirect beneficiary</li><li>Xingda sells tire cord to tire manufacturers in China and abroad</li><li>Positive profit alert likely in next 30 days as industry turnaround continues after 5 weak years</li><li>Trades at massive discount to its largest competitor <a href="https://www.smartkarma.com/entities/21317" target="_blank" data-smartkarma-citation="entities:21317:1">Bekaert SA (BEKB BB)</a>, despite superior profitability and ROE. Management controls 39,2% of shares and has been buying aggressively in last 12 months</li><li>Fair Value: 73% upside by end of 2017</li></ul>

China's car sales continue to increase annually and China's truck sales are on the reboundAll cars or trucks need tires and they need to be replaced frequently Sales of trucks in China no longer driven solely by commodities but also by e-commerce logisticsXingda Int'l Holdings (1899 HK) is prime indirect beneficiaryXingda sells tire cord to tire manufacturers in China and abroadPositive profit alert likely in next 30 days as industry turnaround continues after 5 weak yearsTrades at massive discount to its largest competitor Bekaert SA (BEKB BB), despite superior profitability and ROE. Management controls 39,2% of shares and has been buying aggressively in last 12 monthsFair Value: 73% upside by end of 2017

Chinese Trucks & Cars Love Tires: How Rising Tire Replacement Demand Will Benefit Xingda (1899 HK)

Hong Kong

Shougang Concord Century Holdings Limited, through its subsidiaries, manufactures steel cords, and processes and trades copper and brass products. The Company also develops and invests in properties.

Shougang Concord Century Holdings Ltd (103 HK)

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Shougang Concord Century Holdings Ltd (103 HK)

Xingda (1899:HK) 100% Upside Due to Cyclical Weakness

Xingda Int'L (1899 HK) is one of the largest steel cord manufacturers in China. It is consistently profitable due to its operational efficiency. It...

Reperio Capital

Chinese Trucks & Cars Love Tires: How Rising Tire Replacement Demand Will Benefit Xingda (1899 HK)

China's car sales continue to increase annually and China's truck sales are on the rebound All cars or trucks need tires and they need to be...

Nicolas Van Broekhoven

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)