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S-Share
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Pinnacle
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18-Oct-2007 10:50
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OCBC - China Stocks: Fishing for undervalued S-shares Interest in S-shares looks sustainable. Despite recording good gains this year and the slight sell-down in the past few days, the buying momentum in S-shares looks sustainable as most recovered yesterday from intra-day lows. Overall, the PrimePartners China Index hit a high of 317.96 on 1 Oct 2007 but over the course of the past few days, the index corrected and touched an intra-day low of 288.53 yesterday, before staging a strong rebound of 7.3% to close at 309.69. This seems to indicate underlaying strength and interest in S-shares. As a recap, the approval of the third QDII fund in early October 2007 sparked a rally in S shares, which led to a 13.5% gain for the Prime Partners China Index on 1 October 2007. In addition, higher share prices and increased liquidity in S-shares have also seen these shares play catch up with their highly-valued peers in Shanghai, Shenzhen and Hong Kong. Singapore is still cheaper than China and Hong Kong. The Shanghai A Share Index is trading at 55.4x historical earnings and 48.2x forward earnings while the Shenzhen A Share Index is trading at 73.8x historical earnings and 53.6x forward earnings. This is much higher than the valuations seen for the Hang Seng Index (HSI) and Straits Times Index (STI). The HSI is trading at 19.5x historical earnings and 20.9x forward earnings, while the STI remains the lowest valued at 14.8x historical earnings and 18.1x forward earnings. Fishing for value among S-shares. While several S-shares have run up recently, there are still stocks that have yet to catch up with their peers. In this report, we have done a comparison of stocks within the same sector to identify the undervalued stocks vis-à-vis their Singapore-listed peers. From our findings AsiaPharm Group, China Milk Products Group, Celestial Nutrifoods, China Sports International, Midsouth Holdings, Fujian Zhenyun Plastics Industry and Reyoung Pharmaceutical Holdings appear to be trading at discounts to their peers. Potential shift to other shares that are growing via the PRC market. While the market has been abuzz with interest in S-shares, there is another category of shares that are potentially interesting. These are not S-shares, but are positioned to grow their businesses via the PRC market. Amongst these, we continue to like Man Wah Holdings Ltd (BUY, fair value S$0.74), Karin Technology (BUY, S$0.44), Pacific Andes (BUY, S$0.965) and Tsit Wing International (BUY, S$0.305). |
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invest&earn
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17-Oct-2007 12:49
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Another latest news .. China is likely to triple the quota for overseas institutions from US$10 billion to US$30 billion by the end of this year, the nation's securities regulator said. China Securities Regulatory Commission (CSRC) has pledged to expand the current QFII (Qualified Foreign Institutional Investors) quota of US$10 billion, and following discussions with related parties, the quota will probably be tripled, said Shang Fulin, chairman of CSRC, when answering press questions at the seminar of central financial system delegation of the 17th National Congress of the Communist Party of China. According to Xinhuanet, China and the US reached a consensus on the US$30 billion QFII quota in the second round of China-US Strategic Economic Dialogue. Sources from inside the sector believed the influx of foreign funds will benefit the current investor structure, and upgrade domestic investing philosophy and management pattern. As of the end of 2006, some 52 foreign financial institutions are holding 97.1 billion yuan stocks in Chinese A-share market. |
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invest&earn
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16-Oct-2007 23:47
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Some news to share with all the investors..... China Investment Corp, the country's new $200 billion sovereign wealth fund, will aim for transparency in its operations and will not be a destabilising force in global markets, the firm's head said on Tuesday. Lou Jiwei said CIC, launched two weeks ago, had parked its initial capital in money markets and could get more foreign exchange reserves to manage if its investments performed well, a view echoed by central bank governor Zhou Xiaochuan. Lou said CIC was open to investing around the world, including in Hong Kong and Taiwan, but he scotched speculation it had already bought Hong Kong stocks. He reaffirmed that CIC's investment strategy would be commercially driven and not politically motivated. Politicians in a number of Western countries have expressed concern that foreign governments could use their sovereign wealth funds to accumulate stakes in strategic industries. Some have called for controls on the activity of the funds. But Lou said China had studied more than 20 such funds and had found no wrongdoing on their part. This was because they were prudent in their investments and generally did not seek controlling stakes. "In fact, sovereign wealth funds are a stabilising force in the international market," Lou said. Hedge funds, by contrast, were a source of market instability, Lou added. China could entrust more of its $1.43 trillion in foreign exchange reserves with the CIC, estimated to be the world's fifth-biggest sovereign wealth fund, but only if it manages its investments well. "If I'm making losses every day, how can I face asking the government for more money?" Lou said. Fueling Speculation Because of CIC's sheer size, speculation was already engulfing the new fund, Lou said. "For instance, we have not made any investments in Hong Kong, but there are rumours that we are buying Hong Kong stocks," he said. Shares in Hong Kong Exchanges and Clearing Ltd jumped last month after the Times of London quoted bourse insiders as saying China might be secretly building a stake through CIC in the Hong Kong stock exchange operator. Lou blamed speculators, including mainland mutual funds, for using talk of CIC purchases to push up Hong Kong stocks. The Ministry of Finance has issued roughly $80 billion in special bonds thus far to fund CIC. Lou said CIC had invested its initial capital in money markets but had already paid $67 billion to the State Administration of Foreign Exchange to buy Central Huijin, formerly the investment arm of the central bank. CIC would be as transparent as any profit-driven institution could be and would keep lines of communication open with regulators in countries in which it invests as well as with international organisations, Lou said. "The pressure on us is very great and so is the responsibility," Lou said. He said CIC would be structured like other international investment funds and noted the importance it attached to sound corporate governance with a board of supervisors operating alongside the fund's main board of directors. |
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Green8
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16-Oct-2007 12:10
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Thanks. Would factor in your views for my next purchase.Frank and constructive discussion always welcome. |
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Pinnacle
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16-Oct-2007 12:09
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Furthermore, S-share is less attractive because the company and market cap is relatively smaller as compared to those listed in HK. HK has more so call "blue-chip" H-share like the major banks. |
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ericsim
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16-Oct-2007 12:04
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Green8, 101% disagree, when come to $$$ they know much better than you and me. Suspect BBs not pushing the price sky high otherwise may scare-off china ppl - no more juice left for them jiao. Mind you, not easy for ah peh ah soh to vest in SIN as compared to Macau & HK. this is the only disadvantage i can see |
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Green8
Senior |
16-Oct-2007 10:37
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Not many China people know well Singapore Stock Exchange. No advertisement there, right? I prefer to use active advertisement to attract China, Hongkong, Macau etc rich people to trade here.. More people know about Singapore would be an advantage to our economy. SIA brand, PSA brand, Keppel brand, DBS etc go globally. |
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Pinnacle
Master |
15-Oct-2007 20:43
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Because the actual fund is still not coming in yet. Need to see more concrete evident that the fund is flowing into Singapore market. |
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invest&earn
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15-Oct-2007 15:38
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Both Shanghai and HK market breaking the record high, why Singapore S-share not moving ..... |
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