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Value Investing: Net cash more than market cap

sj9988
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22-Jan-2020 19:06

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Cosco Shipping International (517 HK) increased 14.5% today due to proposed grant of share options to the management. Could this be the catalyst for the management to finally do something about its net cash of HK$4.00 per share? Share price closed today at HK$2.55. Still a long way to go. Cheers...

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
(Incorporated in Bermuda with limited liability)
(Stock Code: 00517)
PROPOSED ADOPTION OF SHARE OPTION INCENTIVE SCHEME
The board of directors (the &ldquo Board&rdquo ) of COSCO SHIPPING International (Hong Kong) Co., Ltd. (the &ldquo Company&rdquo ) proposes that a share option incentive scheme (the &ldquo Scheme&rdquo ) under Chapter 17 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the &ldquo Listing Rules&rdquo ) be approved by the shareholders of the Company (the &ldquo Shareholders&rdquo ).
The purpose of the Scheme is to, inter alia, attract, retain and incentivise senior management and core backbone personnel of the Company, promote the realisation of the strategic targets of the Company, and serve as the driving force for the long-term development of the Company.
The Board will convene a special general meeting of the Company (the &ldquo SGM&rdquo ) for the purposes of, among other things, seeking approval from the Shareholders for the adoption of the Scheme. A circular containing, inter alia, (i) information regarding the proposed adoption of the Scheme and other related matters and (ii) a notice convening the SGM, will be despatched to the Shareholders in accordance with the requirements of the Listing Rules.
As at the date of this announcement, the Scheme remains subject to the approval of the Shareholders. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the Company&rsquo s securities.
Hong Kong, 21 January 2020
By Order of the Board
COSCO SHIPPING International (Hong Kong) Co., Ltd. Zhu Jianhui
Vice Chairman and Managing Director
As at the date of this announcement, the Board comprises nine directors with Mr. Wang Yuhang1 (Chairman),
122
Mr. Zhu Jianhui (Vice Chairman and Managing Director), Mr. Ma Jianhua , Mr. Feng Boming , Mr. Chen
21333 Dong , Mr. Liu Gang , Mr. Tsui Yiu Wa, Alec , Mr. Jiang, Simon X. and Mr. Alexander Reid Hamilton .
1 2
3
Independent Non-executive Director
Executive Director Non-executive Director

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uiop1223
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10-Dec-2019 16:49

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Think yzj should delist.. it way too undervalued and appreciated

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sj9988
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10-Dec-2019 10:55

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Found the following report by CICC. the largest investment bank in China.

Strategy Research
October 18, 2019
Voluntary delisting of Chinese SOEs from HK Stock Exchange

Voluntary delisting recently increased in the Hong Kong market&ndash especially for Chinese SOEs
As a sequel to our April 11, 2016 in-depth report, Exploring H-share privatization, this report analyzes voluntary delisting of Chinese SOEs from the Hong Kong Stock Exchange amid China&rsquo s SOE reforms. Over the past few years, Chinese SOEs that voluntarily delisted themselves from the HK stock exchange or announced delisting plans include Sinotrans Shipping, Harbin Electric (unsuccessful), and Huaneng Renewables (underway).

Incentives and features of voluntary SOE delisting amid China&rsquo s SOE reform. As Chinese SOEs have adjusted their performance evaluation indicators and incentive targets, we believe that their executives, majority shareholders, and parent companies will focus more on the share price performance, shareholder returns, and net profits of listed companies. Thus, we believe that Chinese SOEs are motivated to improve total shareholder returns through voluntary delisting or share buyback.

Characteristics of recent voluntary delisting deals in HK market. The reasons for voluntary delisting include changes in corporate strategy, avoiding business cannibalization, saving listing costs, as well as low stock prices, valuations, and liquidity. Voluntary delisting usually takes 3&ndash 11 months to complete. In successful cases, shareholders typically sold their shares back to the company at an average 35% premium over closing price recorded on the date that the delisting proposal was announced. However, the proposal to delist must be approved at a general meeting of shareholders. If a tender offer is involved, the listco must acquire 90% of its shares held by independent shareholders.

SOEs with the potential for voluntary delisting should have: 1) a high percentage of shares held by major shareholders 2) strong major shareholders and/or parent companies capable of completing delisting deals 3) parent companies with multiple listing vehicles in the A- and/or H-share markets and 4) high listing costs, low valuation, and inactive trading. In addition, the deal should be consistent with strategic targets of major shareholders and/or parent companies, such as optimizing business structure and consolidating resources.

We analyze three recent cases of voluntary SOE delisting in the HK market.
We found that the parent companies of the three SOEs had multiple listing vehicles and were strongly motivated to integrate resources. Major shareholders held more than 50% equity in all the three listed firms. Moreover, before the voluntary delisting these companies had slack trading volumes and depressed valuations. Apart from voluntary delisting, share buybacks can boost share prices, increase equity stakes of major shareholders, and bolster net profits attributable to shareholders. While stock buybacks have slightly lower requirements than do voluntary delistings, buybacks face constraints from the percentages of free-float shares. We screen a list of SOEs that have the potential for voluntary delisting. Our criteria include high percentages of shares held by major shareholders, low stock valuation, slack trading volume, strong parent companies, multiple listing vehicles held by parent companies, and solid business operations.

Based on the report, seems like Cosco Shipping International (517 HK) fit the bill.
1) It is a Chinese SOE with 66% held by Cosco Shipping Group.
2) Being one of the largest, if not the largest, shipping group in the world, the major shareholders is more than capable of completing delisting deals
3) Multiple companies within the Cosco Grouop are listed, including the Singapore-listed Cosco.
4) Low valuation - more than 50% discount to its net cash. Profitable underlying businesses with strong profit growth.
5. The deal could be strategic to its major shareholder. Other SOEs are ' milking' the listed subsidiaries through various related party business transactions, such as property management and agency services. Low capital required for these captive businesses and also highly cash generative.

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sj9988
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18-Nov-2019 14:16

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For value investors, the following are Singapore- and HK-listed companies with significant part of the market cap backed by net cash. While the figures had been obtained from reliable sources and significant care had been taken to improve their reliability, any interested investor is advised to do his or her own due diligence before making any investment decision.

The following table is shortlisted companies based on market cap in excess of US$300mn and at least 4% dividend yield. For the long list of all the companies, please refer to the next table.

	Name	Net Cash as % of Mkt Cap: Last FY	Market Cap (US$ mil)	Share Price (LCL)	Historical Dividend Yield	Historical P/E
2698 HK	WEIQIAO TEXTILE CO LTD-H	302%	327	2.14	8.78	4.19
517 HK	COSCO SHIPPING INTERNATIONAL	199%	392	2.00	7.92	12.16
1829 HK	CHINA MACHINERY ENGINEERIN-H	173%	1,766	3.35	7.15	5.46
1122 HK	QINGLING MOTORS CO LTD-H	143%	606	1.91	9.31	8.82
1361 HK	361 DEGREES INTERNATIONAL	105%	420	1.59	5.85	8.60
88 HK	TAI CHEUNG HOLDINGS	88%	512	6.49	5.41	17.46
258 HK	TOMSON GROUP LTD	72%	509	2.02	9.05	17.43
YZJSGD SP	YANGZIJIANG SHIPBUILDING	72%	2,827	0.98	5.10	5.20
3983 HK	CHINA BLUECHEMICAL LTD - H	74%	1,196	2.03	8.15	7.14
538 HK	AJISEN CHINA HOLDINGS LTD	70%	314	2.25	7.22	4.22
2386 HK	SINOPEC ENGINEERING GROUP-H	69%	2,711	4.79	5.51	10.56
215 HK	HUTCHISON TELECOMM HONG KONG	60%	1,041	1.69	52.20	20.31
811 HK	XINHUA WINSHARE PUBLISHING-H	64%	1,702	5.81	5.89	5.87
2877 HK	CHINA SHINEWAY PHARMACEUTICA	63%	803	7.60	4.70	10.10
639 HK	SHOUGANG FUSHAN RESOURCES GR	62%	1,084	1.60	10.37	7.69
533 HK	GOLDLION HOLDINGS LTD	52%	310	2.47	7.43	6.56
HRNET SP	HRNETGROUP LTD	51%	445	0.60	4.38	12.58

Among the above companies, the following worth taking a closer look.

1. Cosco Shipping International. Sister company of Cosco Singapore. First half dividend increased 40% yoy, inline with 31% increase in its adjusted net profit. Last year, the dividend was HK$0.14. Similar increase as 1H will give HK$0.196, a dividend yield of 9.8%. 2 years back, the company also declared special dividend. Business should be resilient with captive client in Cosco Group but could still get affected if trade war worsen. For more information, please refer to their latest presentation slides:

http://www.coscointl.com/media/1913/2019-interim-results-presentation_eng_final.pdf

2. Qingling Motors. Owned by Chongqing government as well as Isuzu Motors Japan. Manufacturer and distribute Isuzu trucks in China. Many local competitors which compete on pricing but Isuzu still doing well due its product quality. Any government stimulus will benefit them. On the contrary, slowdown in macro will hit them too. Dividend had been stable at CNY0.16 for the past 5 years, having increased progressively from CNY0.05 only in 2009. Basically, its was CNY0.05 for 2008, CNY0.08 for 2009, CNY0.10 for 2010, CNY0.12 for 2011, CNY0.10 for 2012, CNY0.13 for 2013, CNY0.16 since 2014.

http://www.qingling.com.cn/index.asp?lg=en

3. Ajisen China. Master franchisee of Ajisen and Menya Musashi ramen shops in China. Operates 770 outlets as of first half. Tough operating environment due to cost inflation, especially the staff cost, despite positive revenue growth. Dividend paid depends on the company profitability. Declared special dividend in the latest interim results.

http://www.ajisen.com.hk/

	Name	Net Cash as % of Mkt Cap: Last FY	Market Cap (US$ mil)	Share Price (LCL)	Historical Dividend Yield	Historical P/E
2698 HK	WEIQIAO TEXTILE CO LTD-H	302%	327	2.14	8.78	4.19
434 HK	BOYAA INTERACTIVE INTERNATIO	217%	105	1.14	24.00	6.09
517 HK	COSCO SHIPPING INTERNATIONAL	199%	392	2.00	7.92	12.16
2008 HK	PHOENIX MEDIA INVESTMENT HOL	193%	383	0.60	1.69	59.67
882 HK	TIANJIN DEVELOPMENT HLDGS LT	189%	307	2.24	3.59	6.13
769 HK	CHINA RARE EARTH HLDGS LTD	187%	117	0.39	-	45.08
1829 HK	CHINA MACHINERY ENGINEERIN-H	173%	1,766	3.35	7.15	5.46
1122 HK	QINGLING MOTORS CO LTD-H	143%	606	1.91	9.31	8.82
113 HK	DICKSON CONCEPTS INTL LTD	142%	189	3.75	7.24	3.72
296 HK	EMPEROR ENTERTAINMENT HOTEL	141%	260	1.65	5.00	5.75
3389 HK	HENGDELI HOLDINGS LTD	123%	191	0.32	17.06	20.47
6860 HK	FINGERTANGO INC	119%	138	0.56	-	7.77
HLA SP	HONG LEONG ASIA LTD	114%	383	0.69	-	9.21
240 HK	BUILD KING HOLDINGS LTD	112%	146	0.92	4.78	3.35
1006 HK	CHANGSHOUHUA FOOD CO LTD	111%	237	3.23	3.15	4.84
1361 HK	361 DEGREES INTERNATIONAL	105%	420	1.59	5.85	8.60
1104 HK	APAC RESOURCES LTD	105%	146	0.94	10.53	1.64
398 HK	ORIENTAL WATCH HOLDINGS	99%	132	1.81	17.74	7.52
1627 HK	ABLE ENGINEERING HOLDINGS LT	99%	116	0.46	8.89	6.44
1265 HK	TIANJIN JINRAN PUBLIC UTIL-H	97%	165	0.70	-	60.70
281 HK	RIVERA HOLDINGS LTD	96%	167	0.50	8.16	11.77
2355 HK	BAOYE GROUP CO LTD -H	92%	379	5.27	-	3.45
256 HK	CITYCHAMP WATCH & JEWELLERY	91%	940	1.69	-	60.48
1786 HK	CRCC HIGH-TECH EQUIPMENT C-H	89%	253	1.30	4.36	10.66
2278 HK	HAILAN HOLDINGS LTD	89%	157	4.10	-	21.90
88 HK	TAI CHEUNG HOLDINGS	88%	512	6.49	5.41	17.46
1588 HK	CHANJET INFORMATION TECH-H	88%	230	8.30	6.46	14.23
1761 HK	BABYTREE GROUP	84%	438	2.03	-	1.24
217 HK	CHINA CHENGTONG DEVELOPMENT	78%	142	0.19	-	9.41
32 HK	CROSS-HARBOUR HOLDINGS LTD	77%	552	11.58	3.48	4.19
733 HK	HOPEFLUENT GROUP HLDGS LTD	75%	153	1.78	6.18	4.09
710 HK	BOE VARITRONIX LTD	75%	219	2.33	0.44	122.88
613 HK	PLANETREE INTERNATIONAL DEVE	75%	176	0.15	-	17.62
258 HK	TOMSON GROUP LTD	72%	509	2.02	9.05	17.43
1476 HK	HENGTAI SECURITIES CO LTD-H	72%	1,132	3.40	-	62.66
YZJSGD SP	YANGZIJIANG SHIPBUILDING	72%	2,827	0.98	5.10	5.20
247 HK	TSIM SHA TSUI PROPERTIES	69%	5,963	25.20	2.18	12.47
560 HK	CHU KONG SHIPPING ENTERPRISE	68%	192	1.34	6.72	8.32
237 HK	SAFETY GODOWN CO	67%	220	12.74	10.03	6.16
3983 HK	CHINA BLUECHEMICAL LTD - H	74%	1,196	2.03	8.15	7.14
1585 HK	YADEA GROUP HOLDINGS LTD	73%	750	1.96	2.04	12.38
852 HK	STRONG PETROCHEMICAL HOLDING	65%	122	0.45	-	4.78
538 HK	AJISEN CHINA HOLDINGS LTD	70%	314	2.25	7.22	4.22
2386 HK	SINOPEC ENGINEERING GROUP-H	69%	2,711	4.79	5.51	10.56
3315 HK	GOLDPAC GROUP LTD	61%	200	1.88	10.70	7.93
929 HK	IPE GROUP LTD	60%	108	0.80	-	15.17
215 HK	HUTCHISON TELECOMM HONG KONG	60%	1,041	1.69	52.20	20.31
HLSH SP	HOCK LIAN SENG HOLDINGS LTD	59%	123	0.32	-	19.75
327 HK	PAX GLOBAL TECHNOLOGY LTD	57%	484	3.44	2.35	6.44
811 HK	XINHUA WINSHARE PUBLISHING-H	64%	1,702	5.81	5.89	5.87
2877 HK	CHINA SHINEWAY PHARMACEUTICA	63%	803	7.60	4.70	10.10
VALUE SP	VALUETRONICS HOLDINGS LTD	56%	226	0.70	6.26	8.81
815 HK	CHINA SILVER GROUP LTD	63%	173	0.83	-	8.83
639 HK	SHOUGANG FUSHAN RESOURCES GR	62%	1,084	1.60	10.37	7.69
1583 HK	QINQIN FOODSTUFFS GROUP CAYM	61%	192	2.22	-	29.74
289 HK	WING ON CO INTERNATIONAL LTD	54%	858	22.90	3.49	4.58
552 HK	CHINA COMMUNICATIONS SERVI-H	58%	4,718	5.33	3.15	11.26
677 HK	GOLDEN RESOURCES DEVELOPMENT	52%	126	0.58	3.90	267.28
533 HK	GOLDLION HOLDINGS LTD	52%	310	2.47	7.43	6.56
HRNET SP	HRNETGROUP LTD	51%	445	0.60	4.38	12.58
PEC SP	PEC LTD	51%	108	0.57	-	16.91

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