In today’s briefing:
- Another Skyworth (751 HK) Partial Buyback
- Water Oasis: 5.2x FY23 PE with >15% Div Yield and 25% of the Mkt Cap in Cash
- AviChina Industry (2357 HK): Another Step in Restructuring
- Pre-IPO Beauty Farm Medical and Health Industry – Hard to Make Money Due to Industry Characteristics
Another Skyworth (751 HK) Partial Buyback
- Skyworth Group Limited (751 HK) has announced another partial buyback – this time for 100mn shares (3.87% of shares out), at HK$3.80/share, a 20.25% premium to undisturbed.
- On 17 June 2020, Skyworth announced a partial buyback – 12.83% of shares out or 392.8mn shares, at HK$2.80/share, a 32.1% premium to last close.
- Upon successfully completing this partial offer, Stephen Wong & concert parties would hold >50%, prior to the excise of any outstanding options.
Water Oasis: 5.2x FY23 PE with >15% Div Yield and 25% of the Mkt Cap in Cash
- FY22 results for Water Oasis (1161 HK) were very encouraging, with significant HoH improvement from 26 mn HKD to 70 mn HKD (excluding a 33 mn HKD one-off).
- With only 5 out of 6 operational months for H2 FY22, we see a significant improvement in H1 FY23 if HK should remain operational for all six months.
- With the reinstatement of dividends as financial conditions improve, the stock trades at 5.2x FY23 PE with a >15% dividend yield conservatively and 25% of the market cap in cash.
AviChina Industry (2357 HK): Another Step in Restructuring
- AviChina Industry & Tech (2357 HK) announced plan to consolidate helicopter business by disposing Changhe Aircraft and Harbin Aircraft to its subsidiary Avic Helicopter (600038 CH).
- AviChina can achieve synergy at its helicopter business, realise capital gains from disposal and enjoy higher valuations on these assets while maintaining its controlling ownership.
- The resultant increase in stake in Avicopter will further widen AviChina’s discount to its holdings in four listed A-share subsidiaries. Its current 66% discount is just too steep.
Pre-IPO Beauty Farm Medical and Health Industry – Hard to Make Money Due to Industry Characteristics
- Beauty Farm Medical and Health Industry (BFM HK)’s solid growth has indicated that its business model works. But the industry tightening regulation and potential policy risk are our concerns.
- As a downstream company in this industry, we are conservative about Beauty Farm’s profitability. Its profit space could be limited. The Company has weak bargaining power in the whole industrial chain.
- Beauty Farm’s performance could continue to be under pressure due to weak recovery of domestic demand after three years of the pandemic, especially those non-rigid consumption demand.
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