HanKore

HanKore: Substantial shareholder Alan Wang, who runs the high profile fund Asdew Acquisitions, has increased his stakes from 10.99% to 11.16% via the purchase of 858,000 shares at an average price of $0.867 from the open market. We highlight that Wang’s latest share purchase in the company could lend some confidence to shareholders, who have seen HanKore’s shares correct by ~25% since details of the reverse-takeover (RTO) by China Everbright Int'l (CEI) was announced on 2 Jun. The market had viewed the deal negatively as the higher-than-expected transaction price would result in a larger-than-expected EPS dilution. HanKore’s revised FY15e P/E of 23.4x now exceeds its closest peer SIIC’s 22.1x. Nevertheless, Maybank-KE appreciates that the CEI deal will provide HanKore with stronger project sourcing ability, lower borrowing costs and a stronger balance sheet. The house expects HanKore to embark on an acquisition drive to position itself as a key player in the wastewater treatment (WWT) industry, and add 1m tpd of WWT capacity over FY15 and FY16 versus previous estimate of 500,000 tpd. Maybank-KE maintains its Buy call on HanKore with a reduced TP of $1.23 (from $1.70) after slashing its EPS forecasts and valuing the stock at 30x FY16e P/E. It thus views the current share price weakness as a good buying opportunity.