China Minzhong stock has been dragged down by there has been uncoordinated concurrent selling of pre-IPO PE (private equity) investors. Photo: China Minzhong

BNP Paribas says buy CHINA MINZHONG, now at 5.5x 12-month forward PER

BNP Paribas analyst Brenda Lee, CFA, said she maintained her ‘buy’ call on China Minzhong, whose share price has fallen 18% over the past month for a slew of reasons, not the least of which was the poor market sentiment.

The company is also beset by concerns on substantial wholesale vegetable price declines in late 1Q11, and worries on Chinese companies’ corporate governance issues.

Specific to China Minzhong, there has been uncoordinated concurrent selling of pre-IPO PE (private equity) investors.

However, Brenda Lee said “our recent ground checks in China reaffirm the company’s and industry’s strong fundamentals. Despite rising RMB and margin concerns for export products, management is confident about maintaining export margins and improving margins by 1-2ppt for fresh vegetable sales on product mix changes.

“Trading at our 12-month forward P/E forecast of 5.5x, despite negative market sentiment, we remind investors to refocus on Minzhong’s corporate fundamentals.”

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CIMB says the strategy for HU AN CABLE is 'buy and hold"


Chairman and CEO Dai Zhixiang. Hu An Cable's products are used in diverse industries illustrated in the montage.

CIMB says Hu An Cable is a “fundamentally strong company with undemanding valuation.”

It added: “In our view, the strategy to profit from this stock is to buy-and-hold for the longer term to reduce volatility on returns brought about by any potential short term price distortions.

This is possible because of the sound fundamentals backing the company, which has delivered strong earnings growth since it was listed in early 2010.”

In addition, CIMB continues to see good value in this stock, at only 5.5x CY11 P/E (3.3x CY12 P/E).

“Reiterate our BUY call on the stock and target price of S$0.74 (ex-bonus TP of S$0.57).”

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Credit Suisse: Is SGX stock now a trading opportunity?

SGX is trading at 12-month forward PE of 20X.

Credit Suisse noted that SGX’s stock price at $7.27 and valuations are now close to two-year lows, which raises the question of whether the stock is a trading opportunity.

At 12-month forward P/E of 20x, SGX is trading at a 12% discount to the five-year historical average and at a 27% discount to HKEx.

The analysts, Anand Swaminathan and Sanjay Jain, said two main reasons for the stock underperformance are:

(1) Lacklustre equity market volumes. Turnover velocity (30 DMA) (key driver of stock outperformance) is now at cyclical lows of 50% and appears to have limited downside risk, raising the question whether this is a trading opportunity.

(2) Perception of M&A risk (despite management stating that it is not ‘aggressively’ looking for M&A targets).

"We believe that while we cannot rule out M&A in the medium term, near-term risk seems minimal (not at least due to the lack of suitable targets)," wrote the analysts.

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  • Lionel Lim