China Minzhong

China Minzhong: last wk, the 3rd largest sh/h, private equity fund Olympus Capital Hldgs Asia, sold its entire 10.3% stake via vendor share placement at $0.80/sh. Olympus had invested in the co since 2006, and one of the key reasons cited for the sale was the fund’s 7 yr limit for its investment in co. Maybank KE Research notes this placement is a positive for Minzhong as it removes a long-term share overhang on the co without adding too much selling pressure in the open market. Notes also that senior mgt took advantage of the vendor share placement to raise personal stakeholdings. CEO Lin Guorong raised his stake from 6.35% to 6.37% while CFO Siek Wei Ting’s total stake went up from 5.46% to 5.49%. This clearly signals mgt’s confidence in the co’s fundamentals and the attractiveness of its share price. The house continues to like Minzhong for its growth prospects. Given the difficulties Europe is facing, the co has striven to expand its revenue base by seeking out new customers abroad and leveraging the growth potential in Chinese domestic consumption. Pencils an average of 15% EPS growth for the next three years. Believes Minzhong’s share price is deeply undervalued at the current 2.9x FY13F P/E. Reiterates Buy with TP $1.16.