Sinopipe Holdings Limited (Sinopipe) reported stronger than  expected FY10 results, with revenue and profit (to equity)  outperforming our forecasts by 13.7% and 8.2%  respectively. China’s plastic pipe industry prospects  blossomed after the Chinese government made water  conservation their top priority in 2011 and named the  subject China’s 2011 “No.1 Document”. Approximately  RMB4trn will be allocated to this area over the next ten  years and this signifies massive water-related infrastructure  constructions and upgrades. As such, we are raising our  FY11F and FY12F revenue and profit by 12.1% to 15.4%. 

Extracted from NextInsight

Written by Leong Chan Teik

Sunday, 22 August 2010 00:48

SINOPIPE HOLDINGS is a S-chip that has no analyst coverage, so it is relatively unheard of and being a small-cap of only S$38 million, it is far beyond the investment interest of most funds.

It is engaged in the design, manufacture, distribution and installation of a variety of plastic pipes and pipe fittings. 

It recently reported flattish profit growth for 2Q but for 1H, net profit jumped 70.5% to RMB 24.6 million.

A new substantial shareholder with a stake of 5.5% emerged last week – Triumpus Capital – but little is known about its background.

In fact, we would have not paid more attention if not for a particular name that was linked to it: Dr Pu Weidong.

Dr Pu Weidong

Dr Pu was an investment analyst with UOB Kay Hian in Singapore, subsequent to which in 2006, he joined Sinomem as Vice President for Corporate Planning, Strategic Investment and Investor Relation.

A year later, he became its Chief Financial Officer while concurrently holding a directorship in Triumpus Assets Management Pte. Ltd and Triumpus Capital Ltd. 

Dr Pu, 40, resigned from Sinomem at the end of 2009.

Given his expertise in investments, his choice of Sinopipe as a major investment could lead to investors taking a closer look at the company, which many would previously have considered to be in a non-sexy business.

Its gross margin was none too exciting at 19.1% in HY2010.

Valuation-wise, though, it appears more sexy, recently trading at 17 cents, or a hefty 63% discount to its net asset value as at end-June of 234.45 RMB cents (S$0.47).

On a PE basis, it is not expensive. Annualising its 1H earnings per share you will get 4.4 Singapore cents, which translates into a PE of 3.8X based on the recent stock price of 17 cents.

Best of all, its trailing dividend yield stands at an eye-opening 11.7%.

It is not just Dr Pu who has been taking a liking for Sinopipe shares. The company’s insiders have been consistently buying stock too in the past one year.