HK 第12部分; Dollars trading for Pennies
Mickey Mouse stocks $8136.hk and $8473.hk seemed the most interesting to me from another batch of HK 'rocks' I turned over.
Introduction
Spoiler alert / TLDR; This post just contains some rough notes (mostly copy-pasted from corporate filings) of another rocking-turning exercise. Mickey Mouse stocks $8136.hk and $8473.hk are looking absurdly cheap and seemed the most interesting to me among the current batch of stocks. Nevertheless, I am unlikely to do anymore work on the names below (anytime soon) because I prefer (doing more work on) existing holdings and/or larger, more liquid stocks.
Haichang Ocean Park Holding
$2255.hk
As at 31 December 2023, the Group owned and operated seven large-scale marine culture-based theme parks under the brand name of “Haichang” in China.
Our goal is to become a company that allows people to have fun to the fullest and create a place filled with “dream, love, joy”, which can continue to satisfy consumers’ demand for high-quality tourism and leisure products.
For the year ended 31 December 2023, the Group’s parks recorded a total admission attendance of approximately 9.29 million. Excluding the newly opened Zhengzhou Park, the total admission attendance recorded a significant increase by 101.9% as compared with the corresponding period of 2022 and an increase by 8.0% as compared with that of the same park admission attendance in 2019.
In 2022, we integrated the ULTRAMAN IP into our Shanghai Park for the first time. In addition to the ULTRAMAN IP, we continued to launch well-known IP products/events such as the ONE PIECE treasure tribes, Baby Shark-themed rooms, restaurants, shops and parade products in our Shanghai Park.
IMS Group Holdings
$8136.hk
“a US $5m market cap the company has around $9m cash and has ttm earnings of $1.5m”, as pointed out by Myles / @finphysnerd.
It certainly screens absurdly cheap with HKD 0.06 per share in net financial assets (after deducting contract liabilities) on a HKD 0.04 share price. Therefore, it does seem rather silly to have to come up with reasons not to invest. There are just too many absurdly cheap stocks on the HK exchange!
The reasons that held me back from investing in this one, are;
Industry; $8136 is principally engaged in provision of LED lighting fixtures and integrated LED lighting solution services for retail stores of world-renowned luxury brands mainly in the Asia market. Personally I prefer more staples / recurring revenue type businesses. $8136 does have a nice customer list, including the Asian retail stores of world-renowned end-user luxury brands such as Louis Vuitton, Bulgari, Christian Dior and Fendi etc.
Capital returns; $8136 only seemed to have returned capital to shareholders in two years, despite (seemingly) having the financial means to do so. It did not pay out anything in FY2023 (ending March).
Now, $8136 did declare a cumulative HKD 0.014 per share in dividends for the two years before FY2023. That equals 35%!! of the current share price!! That does make it awfully enticing to bet on recommencement of dividends.
Promotional? $1836 launched 3D printing services. Now this is probably for legimitate business purposes. However, it would not be the first time that a company launches/announces new trendy activities to attract attention from investors. Again, I do not think that is the case in this situation, but still I want to see a bit more how this new activity develops.
Currently, I cannot buy any shares of $1836 even if I wanted to. My broker recently put a lot of sub USD 50m stocks with limited trading activity on a restricted list, allowing sell-transactions only.
Mi Ming Mart Holdings
$8473.hk
HKD 140m+ market cap skincare products retailer. HKD 0.13 share price for HKD 0.09 in net financial assets per share (cash and investment properties). Probably double digit % dividend yield.
This looks like a decent enough business at an absurdly cheap valuation.
Jiashili Group
$1285.hk
Jiashili has been producing biscuits and crackers in China since 1956. It sells products under more than 12 brand names in approximately 31 Provinces and Municipalities and 310 prefecture-level cities with more than 660 stock keeping units.
Lotus Bakeries demonstrated that biscuits makers can make for wonderful investments with excellent execution. Sadly, $1285 does not have the type of track record indicating such excellent execution is forthcoming. Moreover, there seem to be issues with (getting paid on) receivables (including from related parties). This would require more research. Finally, the valuation does not look like absurd cheap to me with a hsd P/E multiple, msd % dividend yield, and without obvious valuation support from (hidden) assets value.
China Everbright Water
$1857.hk / $U9E.sg
For me the key attraction to $1857 is the hsd % dividend yield. I am not too keen on (long-duration) project-related businesses though, because it tends to come with poor revenue and cash-flow visibility.
China Everbright Water Limited is an environmental protection company. Its controlling shareholder is China Everbright Environment Group $257.hk.
Everbright Water has developed a full-fledged business coverage, which includes raw water protection, water supply, municipal waste water treatment, industrial waste water treatment, reusable water, river-basin ecological restoration, and sludge treatment and disposal. Meanwhile, the Company has also formed a full industry chain in the water business, including project investment, planning and design, technological research and development, engineering and construction, and operations management.
Good call. However, those illiquid stocks can remain low indefinitely. I once owned one such stock, which could have easily increased tenfold. I spoke to the CEO in Shanghai, who told me that major international companies had offered to buy the entire company for an 8x premium. She refused, stating it wasn't sufficient. Yet, the stock price remains stagnant. Be especially cautious of stocks listed on the GEM exchange; this exchange is completely dysfunctional and inactive.