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

US Stock Watchlist

US Stock Watchlist:

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Australia Stock Watchlist

Australian ASX stock watchlist:

Retail food group Mcmillan Shakespeare Ltd Dicker Data Ltd Virtus Health Ltd SG Fleet Group Ltd AP Eagers Ltd Star Entertainment Group Ltd Credit Corp Group Ltd Event Hospitality and Entertainment Ltd Skydive Beach Group Ltd Blackmores Ltd Magellan Financial Group Ltd Hansen Technologies Ltd Smartgroup Corporation Ltd A2 MILK FPO NZ TechnologyOne Ltd Ramsay Health Care Ltd Idp Education Ltd Fisher & Paykel Healthcare Corporation Ltd Rural Funds Group

Ascendas India Trust

18/4/2017
Accumulate

1. Strong fundamentals
2. Favorable conditions in India
3. Clear growth strategy

Metrics

• Last done (as of 18/4/2017) S$1.115
• AUM S$1.484bn, Floor area CAGR 11% since 2008
• Debt: gearing 30%, well spread out debt maturity, 85% fixed, cost of debt 6.1%, INR and SGD
• Occupancy: 97%, WALE 3.5 years, retention rate 78%, 29% leases expiring in 2017, 43% expiring 2020 and beyond
• NAV: S$0.71, adjusted NAV S$0.90, PNAV ~1.24
• Dividend: S$0.0616 TTM 4QFY15/16 to 3QFY16/17, Dividend yield ~5.5%
• Net property income: CAGR 13% since 2013

Operations

• Owns six IT parks in India - Bangalore (42%), Chennai (29%) and Hyderabad (29%)
• Our strategy is simple – to generate attractive portfolio returns for Unitholders by investing in IT parks and office properties in key Indian cities 
• Total number of tenants: 284, largest tenant accounts for 7% of the portfolio base rent, top 10 tenants accounted for 37% of portfolio base rent, ~50% of tenants in IT sector

Investment thesis

• Clear growth strategy: 
• Development pipeline: 2.24m sq ft in Bangalore, 0.37m sq ft in Chennai, 0.41m sq ft in Hyderabad
• Sponsor assets: 3 sponsors - Ascendas Land International Pte Ltd, Ascendas India Development Trust, Ascendas India Growth Programme, all Right Of First Refusal
• 3rd party acquisitions: 2.40m sq ft aVance Business Hub, 1.50m sq ft BlueRidge 2
• Floor area to increase 24% based on committed pipeline
• Favorable conditions in India
• One of the fastest growing major economy in the world with GDP growth estimated at 6.6% in 2016
• India moving up value chain to offer cutting edge product development and R&D hubs for global tech companies
• Highly cost competitive environment - Occupancy costs up to 10 times cheaper than other low-cost sourcing destinations 
• Robust IT-BPM revenue growth - Forecast to achieve 10-12% growth in FY16/17 to US$157-160 billion

Risks

• Investment risks - failure in developing new assets
• Currency risk - INR to SGD
• Interest rate risk
• Refinancing risk - however debt is well spread and debt levels not too high

Sheng Siong

12/4/2017
Accumulate

1. Attractive dividend yield 3.83% and growing consistently
2. Decent valuation PE 23.5 with strong fundamentals - no debt, consistent profitability, stable industry
3. Growth story - expansion into China

Metrics

• Market Cap S$1.47bn, Float 34.41%
• Last done (as of 12/4/2017) S$0.995
• PE 23.5, PB 5.8, EV/EBITDA 15.7
• Dividend yield 3.83%, Dividend CAGR 5.7%, very consistent
• Revenue CAGR 4.5%, Earnings CAGR 8.4%, very consistent
• Total Debt to Equity 0%
• ROE 25.1%, ROA 12.4%

Operations

• Supermarkets - 43 locations all across Singapore as at October 2016
• As of April 2015, the company offers over 400 products under their 10 house-brands
• Extensive distribution network, food-processing facilities, and warehousing facilities
• Currently revenue only from Singapore, but soon to include China

Investment thesis

• Expansion into China - "The Group envisaged that the supermarket in Kunming, China may be operational from 3Q2017" - 4Q2016 report
• The group will continue to expand its store count and improve its current stores through renovation or refitting

Risks

• Increased competition
• Failure to bid for new stores
• Delays in expansion into China
• Increased food prices and the company is unable to pass on higher costs to consumers

Sinostar PEC

12/4/2017
Accumulate - tp 0.36

1. Attractive valuation - PE 7.2, EV/EBITDA 1.161
2. Decent Dividend yield 2.44% and consistent
3. Favorable petrochemical outlook in PRC - shown in Revenues and Earnings
4. Strong fundamentals - low debt, positive cash flow, high cash holdings

Metrics

• Market Cap S$131.2m, Float 45.91%
• Last done (as of 12/4/2017) S$0.205
• PE 7.2, PB 1.023, EV/EBITDA 1.161
• Total Debt to Equity 0.05%
• Dividend yield 2.44%, just started paying, consistent
• ROE 15.5%, ROA 8.8%

Operations

• Downstream petrochemical products - Propylene, LPG, Polypropylene
• Situated within the Zhongyuan Oilfield—one of PRC’s largest oilfields
• Near populous and industrialised provinces such as Shandong, Henan, Anhui, Jiangsu, Shaanxi, Hebei and Zhejiang
• Transportation and Logistics - Subsidiary Dongming Changshun Transport Company Ltd
• Recent acquisition in 2015 - positive contribution that year
• Annual capacity to process 550,000 tonnes of raw LPG and is able to further process part of generated propylene into 50,000 tonnes of polypropylene annually
• Strategic affiliate - Shandong Dongming Petrochem Group, China’s largest independent oil refiner with primary processing capacity of 15 million tons per year

Investment thesis

• "We believe that the demand for LPG is set to rise, buoyed by robust demand from the residential sector" - annual report 2015
• "The Chinese government is looking to ease policies further in light of the slowdown in the market of which likewise extend to invest and further the growth of the petrochemical industry of the state" - annual report 2015
• Turnaround play - Divested from previous operations to specialize in Petrochemical segment. Was loss making but recently turned profitable