Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

A buy-side analyst with over 15 years of experience investing in Asian markets and specializing in the mid-small cap space, emphasizing value investing in companies with good free cash flows/dividends and long-term holding horizons. 
Exempt Financial Adviser (EFA) under CrossASEAN Research Pte Ltd. It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity, Bottom-up Analyst

Water Oasis, Execution Makes It More Compelling

Water Oasis: A Double From Here, Brace for the Re-Opening of Hong Kong

Water Oasis: Lockdown Affected H1 FY22, Improving H2

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/water-oasis-group-ltd" target="_blank" data-smartkarma-citation="entities:17348:1" rel="noopener">Water Oasis (1161 HK)</a> is a micro-cap gem with the potential to provide a solid return over the next few months owing to a resurgence in beauty treatment in Hong Kong.  We believe the stock can easily double over the next 6 months due to the following catalyst:<ul>
<li>
Improved earnings outlook: With over 2.5 months of shutdowns in H1, we believe that the company is primed to grow its revenue and profitability in H2 2021. We forecast 450 mn HKD of revenue in H2 ( up from 315 mn HKD in H1 ), enabling the company to grow its profitability easily to 134 mn HKD in FY21 placing at 5.6x FY21.</li>
<li>
Huge margin of safety with cash representing 56% of the market capitalization: We believe this will provide ample buffer for the company to do M&amp;A as well as payout dividends.</li>
<li>
Great Dividend Payout Ratio Exceeding 80%: The company's dividend payout ratio exceeds 80% (at the very minimum), which implies a 14.3% dividend yield. </li>
<li>
Opportunity for M&amp;A: We believe with the state of the industry as beaten down as it is, the opportunity for M&amp;A is good, and the company has completed one transaction that we believe will be accretive. </li>
</ul>Risks<ul>
<li>Another Outbreak of Covid in HK which could result in shutdowns of their facilities.</li>
<li>This is a microcap and the company's investor communication is less, so it could take time for the story to play out.</li>
</ul>

Water Oasis (1161 HK) is a micro-cap gem with the potential to provide a solid return over the next few months owing to a resurgence in beauty treatment in Hong Kong.  We believe the stock can easily double over the next 6 months due to the following catalyst:

Improved earnings outlook: With over 2.5 months of shutdowns in H1, we believe that the company is primed to grow its revenue and profitability in H2 2021. We forecast 450 mn HKD of revenue in H2 ( up from 315 mn HKD in H1 ), enabling the company to grow its profitability easily to 134 mn HKD in FY21 placing at 5.6x FY21.

Huge margin of safety with cash representing 56% of the market capitalization: We believe this will provide ample buffer for the company to do M&amp;A as well as payout dividends.

Great Dividend Payout Ratio Exceeding 80%: The company's dividend payout ratio exceeds 80% (at the very minimum), which implies a 14.3% dividend yield. 

Opportunity for M&amp;A: We believe with the state of the industry as beaten down as it is, the opportunity for M&amp;A is good, and the company has completed one transaction that we believe will be accretive. 
Risks
Another Outbreak of Covid in HK which could result in shutdowns of their facilities.
This is a microcap and the company's investor communication is less, so it could take time for the story to play out.


Water Oasis - Micro Cap Gem with Great Return Potential