China Lilang (1234 HK) is a great value play with a tangible recovery story. China Lilang (1234 HK) is a China-based company principally engaged in the manufacturing and wholesaling branded menswear and related accessories in China. The Company designs, sources, and manufactures business and casual apparel for men and sells them under the core brand of LILANZ and sub-brand of L2. The company’s market capitalization is 6 bn HKD, so it could be on the radar of many funds that deal in the small and mid-cap space, focusing on dividend and value.
The broad thesis for investment in this name is :
1. Value play trading at 8.0x FY20 and 6.9x FY21 with 27% of the market capitalization in cash.
2. Great dividend payout and yield of 9.3%
3. Recovery Underway: In its most recent quarterly operation release, the company stated recovery was underway with Q3 2020 retail sales registering a 5-10% growth and Golden Week sales surging by over 40% YoY.
4. Management gave stock options to employees
We believe that this stock could easily trade back to its historical highs of 12-13 HKD/share if it continues to deliver in this challenging environment. H2 2020 earnings result will be a good catalyst for the company.
The company really doesn’t have a good moat over its peers.
Inventory in the channels is currently very high.
The company doesn’t have a strong presence in online sales.
Blue Moon Group Holdings (BMG HK) , a leading consumer household care company in China has filed for an IPO to list its shares on the Hong Kong Stock Exchange and plans to raise about US$1bn. The company offers a wide range of products under three segments fabric care, personal hygiene products and home care products and has been the first to launch several new products such as liquid detergent and liquid soap to the Chinese market and the first mover advantage has helped the company grow its revenues and market share.
We have established a pre-money valuation for Jacobio of US$1.1 billion based primarily on DCF values for JAB-3068, JAB-3312, and the license agreement with AbbVie. Our analysis is subject to change based on additional disclosures in the PHIP and other developments.
This Insight also includes a list of questions for management.