Analyzing Bargain Stocks

Changan Minsheng is a Hong Kong listed logistics company that primarily transports finished vehicles, and vehicle components and parts – mainly for related parties of the China South Industries (CSI) Group, one of the four largest vehicle manufacturers in China, and dealers for Ford, Mazda, and Suzuki. The free float is less than 25% of the issued shares. Sale of vehicles is down substantially in China (16-17% compared to last year) due to weakness in demand, increased competition in logistics, and rising transportation costs. Revenues have fallen to $4.7bn in the last twelve months (ttm) from a peak of $8bn in 2016. Anaemic net profits during the boom years (sub 5% margins) have turned into losses for 2019 and the six months to 2020. TTM losses amounted to $126m. Average EBITDA, adjusted for the lower revenue base, amounts to $180m but capital expenditures are substantial. The depreciation and amortization charge amounted to $157m leaving negligible pre-tax earnings. This charge...

HPC Holdings is a Hong Kong listed company with operations in Singapore. It is engaged in civil engineering and general building construction. It has two segments – Industrial buildings, and Infrastructure with Industrial accounting for the vast majority of revenues. The top two shareholders own 75% of the company stock resulting in a relatively low free float.  Construction activities in Singapore have been largely curtailed due to Covid-19 and the recent operations of the business has suffered as a result. The company generated consistent sales of $1.2bn and average annual net profits of just over $100m. Recent twelve-month sales and profits have tumbled to $1.1bn and $55m respectively. The financial position is strong with net cash of $210m. Net working capital value is $414m and net tangible asset value is $540m. Net working capital value consists largely of receivables, contract assets and net cash. Except for a secondary share issuance of $156m in 2018 priced at $0.45...

Hingtex Holdings is a Hong Kong listed manufacturer of denim fabrics for sale primarily to US customers via several countries such as Vietnam, Bangladesh, and Taiwan. It also sells to customers in China and Japan. Their manufacturing facilities are based in China. Their sales have declined markedly in the last six months due to Covid-19 and also due to the 25% tariffs imposed on their products by the US government. Previously their track record of sales and profitability had been steady peaking at $648m and $127m in sales and net profits in the year ended December 31 st , 2017. Since then, sales have declined to $347m in the last twelve months with losses, primarily due to inventory write-offs. Cash flows for 2019, however, has been positive with $70m in operating cash flows and $30m in free cash flows used to repay borrowings. Though it used $33m in operations in the last six months, this was largely on account of faster payment of payables. The result is a balance sheet that ...