CAPITAL STRATEGIC (資本策略, 497.HK) - RECOMMEND BUY

I have studied this Company for three weeks and my takeaways are:

Capital Strategic (497.HK) is a very good company with a unique business model.  Chairman Mico Chung, Value Partners and Templeton all bought at $0.19-0.24 level.  The stock has also been recommended by "Master Win" in NOW Business News.

The Company will announce its first-half results in December 28.  The results will be very good due to a) one-off gains from CB redemption (~HK$200 million), b) disposal of properties (~HK$60-80 million), c) gains from investments held for trading purpose (~HK$50-100 million) and d) rental income (~HK$50-70 million).  Even though the Company has already announced a positive profit warning, I don't believe that the market price has fully reflected this yet.

The Company has many exciting projects that will come to market in the next 3 years, so the value of the Company will be gradually unlocked.  It is also venturing into the property market in Mainland China, especially Shanghai, which is a promising proposition, I think, given the need to refurbish/reposition some of the properties in Shanghai and the lack of players with similar skill sets as Capital Strategic.

Given the run-up in property prices in Hong Kong and China for the past 12 months, Capital Strategic's property and land portfolio is very valuable.  Capital Strategic's NAV is around HK$3.5 billion.  The Company's market cap of HK$1.8 billion represents ~50% discount.

THIS STOCK IS A SHORT-TO-MEDIUM TERM BUY.  TARGET PRICE IS >$0.35 WITHIN ONE YEAR (VERSUS $0.23 CURRENTLY).