The Matthews Asia Small Companies Fund (Trades, Portfolio) disclosed this week it established holdings in eight companies during the first quarter: DCB Bank Ltd. BOM:532772, Yuhan Corp. XKRX:000100, Cholamandalam Investment and Finance Co. Ltd. BOM:511243, Kuobrothers Corp. ROCO:8477, China Beststudy Education Group (HKSE:03978), ICICI Securities Ltd. (BOM:541179), Alchip Technologies Ltd. (TPE:3661) and PT Bank Tabungan Pensiunan Nasional Syariah Tbk (ISX:BTPS).
The fund seeks long-term capital appreciation primarily through small-cap companies that are capable of sustainable growth based on fundamental characteristics like balance sheet strength, size and stability of cash flows, and management’s depth. As of quarter-end, the portfolio contains 62 holdings, of which eight are new positions.
DCB Bank
The fund purchased 1,010,775 shares of DCB Bank, giving the position 1.71% equity portfolio space. Shares averaged 184.06 rupees ($2.64) during the quarter.
The Indian regional bank offers retail banking, commercial banking, treasury operations and other services to corporate and retail customers. GuruFocus ranks the bank’s financial strength 4 out of 10: Although the company’s cash-debt ratio of 1.03 outperforms 85.84% of global competitors, DCB Bank’s equity-to-asset ratio of 0.09 underperforms 66.07% of global Asian regional banks.
Yuhan
The fund purchased 10,918 shares of Yuhan, giving the holding 1.32% equity portfolio space. Shares averaged 239,944 won ($204.97) during the quarter.
The South Korean drug manufacturer offers one-stop custom synthesis services from research and development to commercial production of active pharmaceutical products and intermediates for various disease treatments. GuruFocus ranks the company’s financial strength 8 out of 10 on several positive indicators, which include a strong Altman Z-score of 5.54, a debt-to-equity ratio that outperforms 79.87% of global competitors and interest coverage that is above Benjamin Graham’s required threshold of five.
Cholamandalam
The fund purchased 102,266 shares of Cholamandalam, giving the position 1.23% equity portfolio space. Shares averaged 1,242.07 rupees during the quarter.
The Indian credit services company offers various financial products, including vehicle finance, business finance, home equity loans and stock brokering. The company’s financial strength ranks a poor 3 out of 10 on several weak indicators, which include an equity-to-asset ratio that underperforms 84.50% of global competitors and a cash-debt ratio of 0.07.
Kuobrothers
The fund purchased 1,058,000 shares of Kuobrothers, giving the stake 1.13% equity portfolio space. Shares averaged 51.94 Taiwanese dollars ($1.68) during the quarter.
GuruFocus ranks the Taiwanese e-commerce company’s financial strength 9 out of 10: Even though the Beneish M-score suggests possible earnings manipulation, Kuobrothers has a strong Piotroski F-score of 8 and a solid Altman Z-score of 6.51. Additionally, the company’s interest coverage is in the triple-digits and outperforms 77% of global competitors.
China Beststudy Education
The fund purchased 4.25 million shares of China Beststudy Education, giving the position 1.09% equity portfolio space. Shares averaged 2.79 Hong Kong dollars (36 cents) during the quarter.
GuruFocus ranks the company’s financial strength 8 out of 10 on several positive signs, which include no long-term debt and a strong Piotroski F-score of 7.
ICICI Securities
The fund purchased 388,683 shares of ICICI Securities, giving the holding 0.78% equity portfolio space. Shares averaged 227.32 rupees during the quarter.
GuruFocus ranks ICICI Securities’ financial strength 6 out of 10: Although the company has a strong Altman Z-score of 4.83, it has a modest Piotroski F-score of 5 and a Beneish M-score that suggests earnings manipulation. Despite this, ICICI Securities’ profitability ranks 9 out of 10 on strong signs like expanding profit margins and a return on assets that is outperforming over 85% of global competitors.
Alchip Technologies
The fund purchased 548,000 shares of Alchip Technologies, giving the position 0.76% equity portfolio space. Shares averaged NT$78.23 during the quarter.
Taiwan-based Alchip Technologies provides silicon design and manufacturing services for companies developing complex and high-volume system-on-chip designs. GuruFocus ranks the company’s financial strength 9 out of 10 on several strong signs, which include robust interest coverage, a strong Altman Z-score of 5.94 and a return on invested capital that exceeds the company’s weighted average cost of capital.
PT Bank Tabungan
The fund purchased 7,784,600 shares of PT Bank Tabungan, giving the stake 0.69% equity portfolio space. Shares averaged 2,037.5 rupiah (14 cents) per share.
GuruFocus ranks the Indonesian regional bank’s financial strength 8 out of 10 on several strong signs, which include no long-term debt and an equity-to-asset ratio of 0.34, outperforming 95.39% of global competitors.
Disclosure: No positions.
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