Friday, December 13, 2013
Hankore: CIMB has an unrated report out on the counter following its recent co. visit. The house note that Riding on China’s inevitable trend of increasing environmental awareness, HanKore’s water treatment business is set to soar on both capacity expansion and higher tariffs from the water standard upgrades. The stock has the most attractive valuation among its peers. Driven by capacity expansion, higher water tariffs and the recently-acquired EPC business, HanKore‟s revenue is set to expand in FY14. The house also expect the group‟s profitability to improve due to highe margins. By conservatively pegging to 1x trailing P/BV, the book value of Hankore is at $0.078, but the house believe this valuation is conservative as the group has strong expansion potential. HanKore is currently trading at 12.2x TTM P/E and 0.90x 1QFY14 P/BV, the most attractive valuation among its peers that average 18.5x and 2.03x respectively. By pegging to 1x 1QFY14.