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Winter's avatar

Found another interesting HK stock - Sundart Holdings /1568.HK/. They are one of the leading fitting-out companies in China, Hong Kong and Macau and work with large office, hotel and residential complex clients. Market cap is HKD 650m, net cash/investments is HKD 1.4bn (yes, 200%+ of MC, it was 300%+ as of YE21, but they settled some trade payables) and avg. profits since 2015 are ~HKD 400m/year. At 10x PE + net cash this should be 700% higher and up until 2020 it was trading 1200% higher. They have suffered this year due to the construction meltdown, but are still very profitable. My main concerns here are the increasing amount of overdue receivables and the relatively low cumulative payout of 34% since 2017 (hence the huge cash pile-up). Still, at such a huge discount and a 23% trailing div. yield (at 40% payout), I couldn't resist. Unless the numbers are completely cooked I don't see how one would not make a very decent return here in any scenario. Do you have any method of searching for financial shenanigans/red flags on Chinese companies? I checked webb-site.com from your HK article earlier this year, but didn't find it particularly useful. Curious to hear your thoughts.

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Sam's avatar

Cheers IJW - some great posts. Need you back on Twitter, I was searching for China opening ideas that weekend and literally have no one to bounce ideas off.

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