1. Olympus Capital, a private equity fund, has sold its entire stake of 57m shares in China Minzhong through a private placement last Thursday at SGD0.80 per share. In our view, this placement is a positive for Minzhong as it removes a long-term share overhang on the company without adding too much selling pressure in the open market.
2. Management took advantage of the vendor share placement to increase personal stakeholdings. This clearly signals management’s confidence in the company’s fundamentals and the attractiveness of its share price.
3. We are looking at an average of 15% EPS growth for the next three years. As it stands, Minzhong’s share price is deeply undervalued at the current 2.9x FY13F PER. Reiterate BUY with the target price unchanged at SGD1.16.
(Source: Kim Eng)
The Technicals:As with other China stocks, I am positive on this stock. The recent selldown certainly represents a buying opportunity.
However, between this and Midas,I prefer Midas. Furthermore, I was already considering buying this stock back when it was in the 50s. I will give this a miss.
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