Founder

Kemp Dolliver, CFA

Cherrystone Hill Research

Equity Bottom-Up

<p>Harmonicare listed in July 2015 at HKD7.55. The shares have fared poorly -- down 27% since the listing. The company missed its forecasts immediately, damaging management's credibility. In addition, the looming ramp up in capacity increases the risks to 2016 and 2017 estimates.  Even though the shares trade at a reasonable valuation (20x 2016E EPS and 17.4x 2017E EPS), we would avoid the shares absent evidence of a rebound in demand. For those inclined to look for value, we note that there was an insider purchase below HKD5.00 in September.</p>

Harmonicare listed in July 2015 at HKD7.55. The shares have fared poorly -- down 27% since the listing. The company missed its forecasts immediately, damaging management's credibility. In addition, the looming ramp up in capacity increases the risks to 2016 and 2017 estimates.  Even though the shares trade at a reasonable valuation (20x 2016E EPS and 17.4x 2017E EPS), we would avoid the shares absent evidence of a rebound in demand. For those inclined to look for value, we note that there was an insider purchase below HKD5.00 in September.

Harmonicare Medical

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