Stock research on global mid-cap companies

Evaluate Research

Evaluate Research provides institutional quality stock research on small-cap and  mid-cap companies on a global basis, thus helping connect investors with the company.

At Evaluate Research, we provide free of cost to all investors a 20-25 page Initiation Report which evaluates in great detail all aspects of the company:  growth opportunities, catalysts, business description, competitive positioning, SWOT analysis, risks, etc.  In addition, we determine specific price targets for the company based on detailed 5-year complete forecasts of financial statements including IS, BS, CF, ratios, etc.  Finally, whereas many sell-side brokers offer sketchy and irregular ongoing maintenance research of companies, if not outright dropped or termination of coverage, at Evaluate Research we systematically monitor and regularly publish Update Notes covering quarterly earnings, major corporate events, etc.

All of the research reports are broadly and freely disseminated globally to leading Fund Managers and analysts who invest specifically in mid-size equities, and also on leading investment information platforms including: Bloomberg, Thomson Reuters, FactSet etc.

Stock research on global mid-cap companies, Evaluate Research

Equity Bottom-Up

Goldlion reported results for the first half ended June 2017 which saw a 2% growth in revenue and a 22.3% decline in adjusted EPS. We would like to note that the decline in adjusted EPS is not as drastic as it seems since it is not a function of falling sales or deteriorating margins. In fact, a major chunk [about 80%] of this decline can be explained by the earlier launch of the company’s promotional and advertising activities resulting in a HK$30.7mn increase in the related expenses.
As of 1H2017, the company had HK$1.25 per share in net cash on its balance sheet. Surplus investment properties not tied up in the company’s core operations accounted for HK$2.59 per share. Thus, net cash and investment properties together add up to HK$3.84 per share. With the stock currently trading at HK$3.15, the value of cash and surplus investments essentially equals 122% of the current stock price.
We maintain our 12-month price target of HK$4.95 per share on Goldlion representing an upside of about 57% over the current stock price. Our price target is based on the DCF and sum of the parts [SOTP] methodologies. Our DCF based price comes to HK$6.92 per share assuming 12% WACC and 3% terminal growth rate. Our SOTP valuation comes to HK$6.00 per share which includes a value of HK$3.75 for cash and surplus investments and a value of HK$2.25 for the base business derived by applying a 9x multiple to our FY2018 earnings estimate of HK 25.00 cents per share for the after-tax earnings of the core business. We believe that in the long-term the stock should trade closer to its intrinsic value and have a long-term price target of HK$6.50 per share with an upside potential of about 105%. Trading at a discount to cash and surplus investments and providing around 8% FCF yield and 6% dividend yield, we believe that the stock has favorable risk-reward characteristics.
Analyst: Ajeya Patil

Goldlion reported results for the first half ended June 2017 which saw a 2% growth in revenue and a 22.3% decline in adjusted EPS. We would like to note that the decline in adjusted EPS is not as drastic as it seems since it is not a function of falling sales or deteriorating margins. In fact, a major chunk [about 80%] of this decline can be explained by the earlier launch of the company’s promotional and advertising activities resulting in a HK$30.7mn increase in the related expenses.
As of 1H2017, the company had HK$1.25 per share in net cash on its balance sheet. Surplus investment properties not tied up in the company’s core operations accounted for HK$2.59 per share. Thus, net cash and investment properties together add up to HK$3.84 per share. With the stock currently trading at HK$3.15, the value of cash and surplus investments essentially equals 122% of the current stock price.
We maintain our 12-month price target of HK$4.95 per share on Goldlion representing an upside of about 57% over the current stock price. Our price target is based on the DCF and sum of the parts [SOTP] methodologies. Our DCF based price comes to HK$6.92 per share assuming 12% WACC and 3% terminal growth rate. Our SOTP valuation comes to HK$6.00 per share which includes a value of HK$3.75 for cash and surplus investments and a value of HK$2.25 for the base business derived by applying a 9x multiple to our FY2018 earnings estimate of HK 25.00 cents per share for the after-tax earnings of the core business. We believe that in the long-term the stock should trade closer to its intrinsic value and have a long-term price target of HK$6.50 per share with an upside potential of about 105%. Trading at a discount to cash and surplus investments and providing around 8% FCF yield and 6% dividend yield, we believe that the stock has favorable risk-reward characteristics.
Analyst: Ajeya Patil

Goldlion Holdings: Earnings Update [H1FY2017]