During the second quarter, the Canada-based Value Partners (Trades, Portfolio) mutual fund purchased a 17,278,000 share stake in the Minth Group (HKSE:00425, Financial), at an average price of 17.9 Hong Kong dollars ($2.31). The trade had a 4.49% impact on the portfolio.
The Minth Group has a market cap of HK$33.16 billion, an enterprise value of HK$32.44 billion, a P/B ratio of 3.10 and a dividend yield of 1.83.
The Minth Group was originally established in 1992 as a small auto parts factory in the Xiaogang Development Zone, located on the outskirts of Ningbo near China’s eastern shoreline. In 1997, after the company had been operating for 5 years, it organized its various branch companies into a single group company, and Minth Group entered into a new area in the field of exterior auto-parts of passenger vehicles in mainland China. The company became publicly traded on the Hong Kong stock exchange on Dec. 1, 2005, and has since expanded its operations to be among the industry leaders in the Global Auto Parts industry.
The Value Partners (Trades, Portfolio) likely decided to take a position in the Minth Group because the company is established, with 24 years of operating experience. It has been able to successfully expand its operations throughout its history, and is currently an industry leader. The Minth Group has also reported strong financial statements over the past 10 years. Its revenue has grown by 24.20%, EBITDA by 22%, Operating Income growth by 20.20% and its book value has increased by 23.70%. The company is also paying a dividend yield of 1.83, which is something the fund looks for when investing in securities.
According to GuruFocus, the Minth Group has a 7 of 10 financial strength rating. The company an Altman Z-Score of 6.09, indicating that it is in the safe zone and is not in any danger of filing for bankruptcy. The company also has a Beneish-M-Score of -2.24, which means that it is not a manipulator of its financial statements.
According to Gurufocus, the company has a 4-star predictability rating based on backtesting results. Stocks with a 4-star predictability rating produce, on average, a 9.8% yearly return over a 10-year sample size. Since the Value Partners (Trades, Portfolio) purchased a stake in the Minth Group, the company’s share price has risen by an estimated 68%.
Disclosure:Â Author does not own any shares of this company.
Start a free 7-day trial of Premium Membership to GuruFocus.
