Excerpts from analyst's report

RHB Research analyst: Goh Han Peng

Hotung Investment Holdings (HIH SP, BUY, TP: SGD1.90) is one of the pioneers in the venture capital business, with over 30 years of investment and fund management experience. The group operates primarily in Taiwan, China, and Silicon Valley and has listed 200 companies on major exchanges around the world.

HuangCuiHuiHuang Cui Hui, Executive Chairwoman, Hotung Investment.
Photo: Company
Hotung targets its investments towards select industries such as biotechnology, e-commerce, materials and smart home key components, investing in companies that are in the expansion stages of development.

Typically, profits are made upon portfolio exits, either through a trade sale or an IPO process. The group has built up a good track record and in the last 10 years, it has been consistently profitable, except in 2008 when impairments spiked up due to the global financial crisis.

After a record year in 2015 when the group listed 5 out of the 55 companies that went IPO in Taiwan, the group has seen a slowdown in 9M16, with net profit down by 18% yoy to TWD180m. 

Goh Han Peng"Our TP of SGD1.90 is based on the stock trading up to a P/B ratio of 0.6x and a yield of 7%. We recommend a Buy on Hotung."


-- Goh Han Peng, analyst (photo)

We are forecasting a 30% decline in net profit in 2016. Notwithstanding this, we think the group is still able to support a dividend of 12 cents, representing a dividend yield of 8%.

Hotung adopts a dividend policy of paying out all of its profits and this has translated to an attractive yield of 8-12% historically.

On the balance sheet front, the group has abundant liquidity with net cash position of TWD2.2bn (~SGD100m), which represents two-third of its market capitalization. 

Management has embarked on an active share buyback program and has bought back 2% of the outstanding stock in the last two years. Trading at just 0.5x P/B, we think Hotung is attractively priced and undervalued.

Share Prices

Counter NameLastChange
AEM Holdings3.7300.030
Avi-Tech Electronics0.280-
Best World1.760-
Broadway Ind0.120-
China Sunsine0.4000.005
Food Empire0.630-0.010
Fortress Minerals0.370-0.005
Geo Energy Res0.350-0.005
Golden Energy0.790-0.005
GSS Energy0.048-
ISDN Holdings0.400-
IX Biopharma0.124-0.001
Jiutian Chemical0.0810.001
KSH Holdings0.350-
Leader Env0.056-
Medtecs Intl0.134-0.002
Meta Health0.025-
Nordic Group0.4700.005
Oxley Holdings0.1540.003
REX International0.2300.005
Sinostar PEC0.185-
Southern Alliance Mining0.4200.010
Straco Corp.0.4050.010
Sunpower Group0.275-
The Trendlines0.0940.002
Totm Technologies0.099-0.003
UG Healthcare0.189-0.001
Uni-Asia Group0.8200.010
Wilmar Intl4.020-0.030
Yangzijiang Shipbldg1.350-0.030

NextInsight RSS

rss_2 NextInsight - Latest News

Online Now

We have 701 guests and no members online