Chinasoft International (0354.HK)

22/5/2017

metrics

• market cap 10,545.98 mil hkd (1.88bn sgd)
• last done 4.38 hkd
• pe 19.60, pb 2.18, ev/ebitda 11.82
• dividend yield 0.28
• 10 year: revenue cagr 23% consistent, 6 year: earnings cagr 25% consistent
• total debt / equity 31.92%
• roe 11.77%, roa 6.04%, both consistently increasing
• strong cash flow and healthy and increasing cash in balance sheet

NS Solutions (2327:JP)

22/5/2017

metrics

• market cap 259,010.80mil jpy  (3.2bn sgd)
• last done 2,603 jpy
• pe 17.42, pb 2.04, ev/ebitda 11.70
• dividend yield 1.73, 7 year: dividend cagr 22%, consistent
• 7 year:  revenue cagr 5.2% consistent, earnings cagr 8% consistent
• total debt / equity 0.71%
• roe 12.59%, roa 7.72%
• positive cash flow and strong cash in balance sheet

Yihai International Holding (1579.hk)

17/5/2017
buy - ld 4.07 hkd, tp 6.90, upside 69%
sole supplier of hot pot soup flavoring products to Haidilao Group, popular steamboat chain.

metrics

• market cap 4229.48 hkd mil (760 sgd mil)
• last done 4.06 hkd
• pe 16.64, pb 2.96
• dividend yield 1%
• 4 year: revenue cagr 36% consistent, earnings cagr 70% consistent
• total debt to equity 0%
• roe 26.52%, roa 18.55%
• strong positive cash flow, spike in cash in balance sheet

operations

• In China, the Group is the exclusive supplier of hot pot soup flavoring products to Haidilao Group, supplying customized hot pot soup flavoring products to Haidilao Group, and supplying retail products and customized condiments to Shuhai Supply Chain and Youdingyou (related parties of the Company). The Group is also a provider of cooking condiment to the family customers in China, suppliers of catering services and food companies
• leading and rapidly growing compound condiment producer in China
• sales of the Group covered 360 cities in China, including all tier-1 cities, 32 tier-2 cities and 324 tier-3, tier-4 and lower-tier cities
• number of distributors of the Group reached 782
• as of 31 December 2016, the Group introduced a total of 41 flavoring products, 9 dipping sauce products and 15 Chinese-style compound condiment products
• expansion of e-commerce channels - Tmall and Suning E-commerce
• As of 31 December 2016, the Group exported products of eight categories to 14 countries and regions, including Hong Kong, Macau, Burma and Malaysia

outlook

• In 2016, the market size of China’s catering industry increased by 10.8% year-on-year to RMB3.6 trillion, while the total retail sales of consumer goods topped RMB33.0 trillion, a year-on-year increase of 10.4%
• The market size of the PRC compound condiment is expected to reach RMB148.8 billion by 2020, representing a CAGR of 14.7% over 2015-2020 and 22.1% of the overall condiment market of China

Forever stock list

Singapore:

1. DBS Group Holdings Ltd
2. Capitaland Ltd
3. Venture Corporation Ltd

Hong Kong:

1. 0700.HK - Tencent Holdings Ltd
2. 2318.HK - Ping An Insurance Group Co of China Ltd
3. 1299.HK - AIA Group Ltd
4. 2018.HK - AAC Technologies Holdings Inc
5. 0696.HK - TravelSky Technology Ltd
6. 0669.HK - Techtronic Industries Co Ltd
7. 2020.HK - ANTA Sports Products Ltd
8. 0285.HK - BYD Electronic International Co Ltd
9. 0698.HK - Tongda Group Holdings Ltd
10. 1448.HK - Fu Shou Yuan International Group Ltd
11. 0354.HK - ChinaSoft International Ltd
12. 1579.HK - Yihai International Holding Ltd

Tat Seng Packaging (T12)

10/5/2017
accumulate - ld 0.575, tp 0.70, upside 21%

1. undervalued pb < 1 and pe 6.2
2. fundamentally sound - china manufacturing figures ok
3. attractive and growing dividends with low payout ratio

metrics

• market cap S$ 90.39 mm, float 16.69%
• last done S$ 0.575
• pe 6.228, pb 0.865, ev/ebitda 3.111
• dividend yield 3.47%, dividend 5yr cagr 24% consistent, payout 33%
• revenue 5yr cagr 4.8%, earnings 5yr cagr 13.4%, uptrend
• total debt / equity 33%, current ratio 1.49
• roe 14.7%, roa 6.3%
• strong positive cash flow, stable and growing cash in balance sheet
• shareholders: Hanwell Holdings Limited 63.95%, See Moon Loh 15%

operations

• manufactures and sells corrugated paper packaging products such as corrugated boards and cartons for the packaging of electronics and electrical, food, pharmaceutical and other products
• 85% of FY16 revenue was from within China, with the rest derived from Singapore
• For FY15, three largest customer sectors were Printing, Publishing & Converters (40%), Medical, Pharmaceutical & Chemical (27%) and Electronics & Electrical (20%)
• five facilities in China – namely, Suzhou, Jiangsu province; Hefei, Anhui province; Nantong Rugao and Natong Tongzhou, both in Jiangsu province and lastly, Tianjin

outlook

• annual report 2016
• We expect the operating environment in China and Singapore to remain challenging
• For our Singapore operations, raw material costs may increase if the exchange rate of US Dollar against Singapore Dollar is strengthened further
• In China, with increased environmental awareness and measures introduced by the Chinese government to deal with pollution, we expect the cost of raw materials and processing costs to increase
• china pmi > 50, china consumer sentiment > 100

Cogent Holdings (KJ9)

11/5/2017

buy - ld 0.785, tp 1.08, upside 37%

1. strong growth with reasonable valuation pe 11.9
2. strong business - properties located in good locations, value chain services
3. clear growth strategy

metrics

• market cap S$ 382.8 mm, float 12.93%
• last done S$ 0.8
• pe 11.935, pb 3.03, ev/ebitda 8.812
• dividend yield 2.35, dividend cagr ~70%, consistent
• revenue cagr ~7.3% consistent, earnings cagr 32% consistent
• total debt / equity 94.7%, declining past 3 years
• roe 27.9%, roa 9.07%
• strong positive cash flow, stable cash in balance sheet
• shareholders: Yeow Khoon Tan (chairman) 70.27%, Yeow Lam Tan (managing director) 13.58%

operations

• 4 business segments
• transportation management services (19% of revenue) - over 100 prime movers and 400 trailers, transport containers
• warehouse & property management services (40% of revenue) - inventory management, container stuffing and un-stuffing activities, re-packing and palletisation, forklift handling, chemical sampling and drumming services, the grandstand (largest shopping and lifestyle hub in bukit timah)
• container depot management services (19% of revenue) - container depot and yard operations
• automotive logistics management services (22% of revenue) - 10 storage facilities and capability of storing more than 3,000 cars at various locations, customs processing
• Cogent One-Stop Logistics Hub - 1.6 million square feet Gross Floor Area, warehousing, container depot and transportation services, high volume of deliveries can be made simultaneously within minutes, in Singapore’s prime petrochemical hub will give Cogent a strategic advantage to outperform its competitors

growth strategy

• clear growth strategy
• Expansion of warehouse & container business in Malaysia - Port Klang Project, expanding the warehouse business with an additional 270,000 square feet of build-up area. The warehouse has commenced operations in March 2017
• Jurong Island Chemical Logistics Facility project on Jurong Island - 3.5-hectare plot of land, cater to the strong and growing demand for one-stop logistics services within Jurong Island, took over on 13 October 2016
• recently awarded 5.9-hectare container depot at Tuas South and our patented Sky Depot at the Cogent 1.Logistics Hub, both of which are expected to be fully operational by the 2nd quarter of 2017

risks

• The financial liabilities of the company are interest-free - little interest rate risk
• The group’s transactions are largely denominated in Singapore dollars - little fx risk
• transportation management services revenue declines past 2 years from 30.3mil to 25.9mil - could be due to industry slump or increased competition or increased costs