Matthews Asia Small Companies Fund (Trades, Portfolio) acquired five new holdings in the second quarter. Among them are Yonwoo Co. Ltd. (XKRX:115960, Financial), Best Pacific International Holdings Ltd. (HKSE:02111, Financial) and Macauto Industrial Co. Ltd. (ROCO:9951, Financial).
Matthews Asia Small Companies Fund (Trades, Portfolio) seeks to achieve its investment objective by investing at least 80% of its assets in common and preferred stocks of small Asian companies, excluding Japan. They look for smaller companies that are capable of sustainable growth. The Fund uses a bottom-up approach with a focus on long-term performance. The Fund has been active in Asia since 1991. It reported a 3-year cumulative return of 8.1% with an excess gain of -44.2% from 2013-2015.
Yonwoo
In Yonwoo, the Fund purchased 167,375 shares for an average price of 43646.15 won ($39.13) per share. The transaction had an impact of 1.32% on the portfolio.
Yonwoo is a Korean company that manufactures synthetic packaging materials for cosmetics. It has a market cap of 518.24 billion won with an enterprise value of 503.2 billion won. It has a price-earnings (P/E) ratio of 22.9 and a price-book (P/B) ratio of 2.9.
GuruFocus ranked Yonwoo’s financial strength 7 of 10. Its cash to debt ratio is 1.6, above the industry median of 0.56.
GuruFocus ranked the company’s profitability and growth 4 of 10. It has an operating margin of 11.8% and a net margin of 9.4%. Its return on equity (ROE) is 30.2% and its return on assets (ROA) is 22.7%, ranking above 90% and 95% of other companies in the industry.
The DCF Calculator gives the stock a fair value of 19038.21 won. It was trading at 40850 won today.
Best Pacific International
In Best Pacific, the Fund purchased 9.1 million shares for an average price of 4.92 Hong Kong dollars (63 cents) per share. The transaction had an impact of 1.31% on the portfolio.
Best Pacific produces textiles, specifically materials used in women’s lingerie, such as elastic fabrics, elastic webbing and lace. It has a market cap of HK$6.6 billion with an enterprise value of HK$6.62 billion. It has a P/E of 16.6, a P/B of 3.6 and a price-sales (P/S) ratio of 3.3.
GuruFocus ranked the company’s financial strength 7 of 10. Its Piotroski F-Score is 6, indicating a stable financial condition. Its Altman Z-Score is 3.4, placing it in the safe zone. The company’s Beneish M-Score of -2.5 indicates it is not a manipulator of its financial records. The company’s cash to debt ratio is 0.93, below the industry median of 2.8.
GuruFocus ranked Best Pacific’s profitability and growth 6 of 10. Its operating margin is 21.9% and its net margin is 17.6%. It has a ROE of 22.6% and a ROA of 13.7%, ranking it above 86% and 90% of other companies in the industry.
The DCF Calculator gives the stock a fair value of HK$4.17. It was trading at HK$6.47 today.
Macauto
In Macauto, the Fund purchased 1.2 million shares for an average price of 175 New Taiwan dollars ($5.52) per share. The transaction had an impact of 1.2% on the portfolio.
Macauto is a Taiwanese company that manufactures and sells automotive sunshade products, cordless garden tools and air activated carbon filtration. It has a market cap of NT$15.5 billion with an enterprise value of NT$15.4 billion. It has a P/E of 21.2, a P/B of 7.9 and a P/S of 3.8.
GuruFocus ranked Macauto’s financial strength 7 of 10. Its Piotroski F-Score is 8, indicating a healthy financial condition. Its Altman Z-Score is 6.3, placing it in the safe zone. The company’s Beneish M-Score of -2.3 indicates the company does not manipulate its financial records. Its cash to debt ratio is 1.2, above the industry median of 0.74.
GuruFocus ranked the company’s profitability and growth 9 of 10. Its operating margin is 21.4% and its net margin is 18.3%. It has a ROE of 37.8% and a ROA of 18.5%, ranking above 95% of other companies in the industry.
The DCF Calculator gives the stock a fair value of NT$106.16. It was trading at NT$210 today.
The Fund’s other two new holdings are in Dexter Studios Co. Ltd. (XKRX:206560, Financial) and IMAX China Holdings Inc. (HKSE:01970).
Disclosure: I do not own stock in any companies mentioned in the article.
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