Sorry that I haven't written for months. I will try to be a bit more diligent and at least post an idea or two every month.
HERE'S THE LATEST IDEA: Recommend "Buy" on Xinao Gas (2688.HK)
+ China's energy consumption will continue to grow in the foreseeable future
+ Natural gas is increasingly used instead of coal and this trend will continue in the foreseeable future
+ PRC gov't is incentivized to see the sector develop due to its strategic importance
+ Sector has high barrier to entry, being a) relationship with upstream gas providers such as PetroChina, b) capex, c) ability to obtain license from gov't on gas projects, among others
+ Xinao Gas is a leading player that has demonstrated ability to grow revenue and achieve decent margins in the past 10 years
+ Earnings is projected to grow by 20-25% CAGR from 2010 to 2012
+ Valuation is attractive at 17x P/E (based on 2010 analyst consensus earnings estimate), representing 20-30% discount to peers
+ Recent price weakness was due to alleged fraud but there has been no proof nor further development to the story, and price has started to recover
+ Morgan Stanley had reported recently that Xinao Gas may announce 6-7 new gas projects in the next few weeks
+ A peer company, China Gas, will report its earnings this week and the results should be very favorable, which reflect that sector fundamentals is good
Target price is $24/share (vs. $18.3 now), representing 30% upside potential. But do your own homework before buying. Here are some analyst reports that you can download.
MS Report:
https://docs.google.com/fileview?id=0B7h43MoiTlxyMjg5OGNjZmQtYjU3MS00MjQ0LTk1NTQtZjcyNTgzMDlkOGRk&hl=en
Citi Report:
https://docs.google.com/fileview?id=0B7h43MoiTlxyM2Y2YWRiN2QtNDgzNC00MTIxLTkwNDItOTg1YTljNmY4ZTc1&hl=en
CPY Report:
https://docs.google.com/fileview?id=0B7h43MoiTlxyZDg1YTdlZDgtZjM5Zi00NDY5LTg0ZGItMTMxY2IyODFhYjI1&hl=en
ML Report:
https://docs.google.com/fileview?id=0B7h43MoiTlxyMzYxMjk0MzYtZWIyNy00OTIwLWI0ODItMjI1ZGFhMzBjY2I3&hl=en
GS Report:
https://docs.google.com/fileview?id=0B7h43MoiTlxyY2ZmMmU3MDktNTVlZi00NjA0LWI5OWQtYzhlODU3ZjZmMjQw&hl=en
MS Report:
https://docs.google.com/fileview?id=0B7h43MoiTlxyMjg5OGNjZmQtYjU3MS00MjQ0LTk1NTQtZjcyNTgzMDlkOGRk&hl=en
Citi Report:
https://docs.google.com/fileview?id=0B7h43MoiTlxyM2Y2YWRiN2QtNDgzNC00MTIxLTkwNDItOTg1YTljNmY4ZTc1&hl=en
CPY Report:
https://docs.google.com/fileview?id=0B7h43MoiTlxyZDg1YTdlZDgtZjM5Zi00NDY5LTg0ZGItMTMxY2IyODFhYjI1&hl=en
ML Report:
https://docs.google.com/fileview?id=0B7h43MoiTlxyMzYxMjk0MzYtZWIyNy00OTIwLWI0ODItMjI1ZGFhMzBjY2I3&hl=en
GS Report:
https://docs.google.com/fileview?id=0B7h43MoiTlxyY2ZmMmU3MDktNTVlZi00NjA0LWI5OWQtYzhlODU3ZjZmMjQw&hl=en
Posts
1 comment:
I really appreciate the efforts you have put into analyzing a single stock. I have actually bought it at 14 dollars when it dropped so rapidly. I really think it does possess the idea of urbanization . When every city develops, it needs energy. It has a really clear positive cash flows. ANYWAY, thx
DAVIDFBE
Post a Comment