Author Topic: 1285.HK Jiashili  (Read 342 times)

Lupo Lupus

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1285.HK Jiashili
« on: December 29, 2018, 10:06:19 AM »

Jiashili is a Hongkong-listed Chinese biscuit manufacturer. They IPOed in 2014 and their stock price has been in decline (surprise surprise!) since then. They are optically very cheap:

MCAP (in HkD): 750 mln
PE:6
PB: 0.8
DY: 8%

Some of my notes on this

POSITIVES

   Fairly stable business, good ROE
   Large net-cash position
   One of the largest biscuit manufacturers, old establish brand (I asked around; they are well-known but have somehow old-fashioned image)
   Two large minority owners; should give some protection for minority shareholders

NEGATIVES
   Chinese biscuit market is competitive according to IPO prospectus (available on their website, very informative)
   Majority-owned by Chairman: I see this as a negative in Asia. There is great potential for asset tunnelling and risk of a lowball offer taking the company private after accumulating cash on the balance sheet
   In total five directors have resigned since the IPO
   Paid a large dividend prior to IPO, thus IPO has indirectly been used to cash-out
   Receivables have shot up recently.

My main concern with this one is corporate governance. Otherwise it seems a good price for a stable boring business.

Anybody done some work on this one?