In today’s briefing:
- Perfect Medical: Correction Provides An Opportunity For Entry
- China VAST (6166 HK): Expect November Scheme Meeting As Pre-Cons Satisfied
- CanSino Biologics Inc (688185.CH/6185.HK) – Some Positive Progress in Business
- Energy China (3996 HK): Positive Developments in All Fronts
- Giant Biogene Pre-IPO – Thoughts on Valuation
Perfect Medical: Correction Provides An Opportunity For Entry
- Post the massive correction in the China market, Perfect Medical Health (1830 HK) trades at 9.6x/6.9x PE FY23e/24e with a 10.4%/14.6% dividend yield assuming a 100% payout ratio.
- From interactions with the management, HK’s operations are in good health, with Q2 revenues normalizing to precovid levels. China has yet to recover as intermittent lockdowns plague its operations.
- With cash and financial investments over 550 mn HKD ( 16% of market capitalization ), the company has the opportunity to make accretive acquisitions to grow its business.
China VAST (6166 HK): Expect November Scheme Meeting As Pre-Cons Satisfied
- Back on the 9 June, Urban planner China Vast Industrial Urban Development (6166 HK) received a pre-conditional Offer, by way of a Scheme, from China Jinmao Holdings (817 HK).
- The cancellation (and final) price is HK$2.40/share, a ~30% premium to the undisturbed price. Pre-Conditions include approvals from SAMR, SASAC, and NDRC.
- Those pre-cons have now been satisfied. The Scheme Doc is currently expected to be dispatched on or before the 31 October. There may be some slippage.
CanSino Biologics Inc (688185.CH/6185.HK) – Some Positive Progress in Business
- CanSino Biologics Inc (688185 CH)’s business has made some positive progress recently, including the launch of COVID-19 Vaccine for Inhalation, commercialization and development progress of MCV4/PCV13i, etc.
- CanSino’s technology platforms are very valuable and are above average level. Currently, there’re little potential domestic competitors, because CanSino’s products are newer, better and safer than domestic homogenized products.
- Even based on conservative forecast, CanSino’s valuation in HKEX is “ridiculously low”. Considering the downside risk in HKEX, CanSino A-share could be better option before valuation in HKEX becomes reasonable.
Energy China (3996 HK): Positive Developments in All Fronts
- China Energy Engineering (3996 HK) witnessed a good acceleration in quarterly new contracts in this year. We estimate current backlog equals to 6.4x its FY21 revenue.
- It is well geared towards China’s new energy development, as reflected by a 108.3% YoY surge in new energy contracts. Its pumped storage new contract value leaped 144x in 1H22.
- The spin-off of Gezhouba Explosive in the A-share market is progressing well with approval from shareholders in Sep. The stock’s 4.1x PER and 0.33x P/B look undemanding.
Giant Biogene Pre-IPO – Thoughts on Valuation
- Giant Biogene Holding (GBH HK) aims to raise around US$500m in its Hong Kong IPO.
- GB is a leader in the bioactive ingredient-based professional skin treatment product industry in China.
- We had looked at the company’s past performance and undertaken a peer comparison in our previous notes. In this note, we’ll talk about valuations.
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