June 2nd, 2022 | 10:38 CEST
Alibaba, JinkoSolar and Hong Lai Huat: Stocks for the stimulus package
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"[...] We recognized that there is a lack of business models that combine innovative business concepts, such as "new retail" solutions and omni-channel strategies, with conventional business segments. [...]" Fan Xian Yong, CEO, The Place Holdings
For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.
Hong Lai Huat: Optimistic, profitable and cheap
The lifting of lockdowns and the stimulus package will likely revive the entire Asian region, including the real estate sector. If the Chinese real estate market is too hot for you, you should look at the share of Hong Lai Huat - the valuation appears attractive. With a market capitalization of just over EUR 30 million, the P/E ratio for 2021 is around 7.5, and the price-to-book ratio is below 0.4, plus there is a dividend yield of about 2.20%. The real estate developer and builder based in Singapore has decades of experience in the realization of public and private residential complexes as well as commercial and industrial buildings. Its current focus is on projects in up-and-coming Cambodia. 2019 saw the launch of the Royal Platinum mixed-use project. 90% of the units have already been sold to local and international buyers. At the IIF virtual investor conference, the Company expressed confidence. "After a difficult pandemic, we have left the crisis behind. Cambodia is the first country in the region to open up to vaccinated people. That has given our business a noticeable boost. Cambodia remains an attractive location for real estate projects," said Dylan Ong, General Manager and Executive Director of Hong Lai Huat. "After D'Seaview and Royal Platinum, there are two more projects in the pipeline in Cambodia. The project volume will increase significantly. Management and shareholders are pursuing a growth path together." The entire presentation can be accessed here.
Indeed, Hong Lai Huat appears to have emerged from the Corona Crisis and is back to profitable organic growth. In 2021, revenue climbed 132% to EUR 11.20 million. The gross margin was a proud 62%. Hong Lai Huat improved net profit from continuing operations to EUR 4.09 million. In 2020, a loss of EUR 5.23 million had to be posted. The Company intends to grow organically and through acquisitions in the current year. The funds required for this are available.
JinkoSolar: Will it succeed in overcoming resistance?
Even without the economic stimulus package, things have been going well for JinkoSolar in recent weeks. The shares of the Chinese solar module and solar cell producer have held up very well and are trading below important resistance at around EUR 57. If Jinko can continue to report orders as recently, this should soon be overcome. Thus, the solar specialist had recently reported an expansion of the distribution partnership in Latin America. The partner is the Brazilian Aldo Solar, one of the largest distributors of solar energy solutions in Latin America. Aldo's market share in the distributed power generation segment is around 30%. Under the agreement, new N-type modules from JinkoSolar with a total capacity of about 600 MW will be distributed. Jinko had previously received an order to supply solar modules with a capacity of 200 MW from northern China. The solar modules have an efficiency of up to 24% and will be supplied to China General Nuclear Power Group (CGN).
An economic stimulus package could boost Alibaba's share
Alibaba shareholders have needed strong nerves in recent months. The shares of the Chinese tech giant have lost more than 50% of their value in the past 52 weeks. They are currently trading at around EUR 90. At its peak, it was once over EUR 250. The catastrophic share price development is primarily due to the political uncertainties in China. After all, the latest quarterly figures are quite respectable. Sales amounted to USD 32.2 billion and were thus 9% higher than in the same quarter of the previous year. Diluted earnings per share were USD 1.25. More people shopped online due to the lockdowns, and Alibaba reported over 1 billion active customers in China for the first time. Top sellers were groceries and drugstore items. Overall, analyst forecasts for revenue and profit were exceeded. The outlook was also positive. Management expects supply chain issues to slowly ease in the coming months. Alibaba should benefit from the easing measures and the economic stimulus package - which is intended to boost private consumption, among other things. Of 40 accompanying analysts, the majority recommend Alibaba's stock as a buy. The average price target is around USD 154 or the equivalent of around EUR 144.
Asian shares have not had it easy in recent months. The easing and stimulus package in China should improve sentiment across the region. Shares such as Alibaba, Hong Lai Huat and Jinko should be able to benefit from this.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
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