When we first started watching the stock on Jan 1st, the price was around $0.34 a share. It has since climbed up to as much as $0.48 and then leveled of at around $0.40. We have decided to add this stock to our stock watch as it fits in with our model of looking for companies with strong fundamentals. The company is appealing as it is a growth company but it’s balance sheet is not dogged down by the usual debts that many growth companies have. They also have above industry-average growth margins of around 15%.

At the time the share price was HKD1.02, so the current increase to HKD1.99 plus the HKD0.12 dividend puts the return on investment at HKD1.09 or approximately 106%.  One million Hong Kong dollars invested in Allan would have grown to over two million in just six months.

At this point I suggest selling half of the shares you have in Allan International Holdings, essentially returning to cash your initial investment funds.  I am confident the fundamentals of Allan are excellent though with the present uncertainty in the markets 106% profit over a six month period needs to be realized.  The other half of the funds you have remaining in Allan I would keep as a long term investment with the dividends keeping you warm at night during turbulent times.

Marcus Maher

Chief Business Analyst – China

Disclosure: Marcus Maher currently owns shares in Allan International Holdings Ltd.

Remarks : Due to reporting and updating time-lag, readers and users should exercise caution when using the data presented in this analysis.

Products include biscuits, candies, chocolate, condiments, margarine, milk power products, healthy food, noodles, snacks, rice, and nourishing and exclusively licensed branded products; beers, wines, and soft drinks; batteries and toiletries; make-up, perfumes, fragrance, and skin and sun care products; and frozen meat, seafood, and diary products.

The company was founded in 1994 and is headquartered in Sheung Wan, Hong Kong.

MARKET CAP 249.6M

TOTAL REVENUE 1.9B

EBITDA 193.3M

DILUTED EPS TTM 0.06

P/E 11.7x

P/S 0.8x

RETURN ON ASSET 2.93

RETURN ON EQUITY 5.39

K = Thousands        M = Millions        B = Billions

Macau’s gaming sector has undergone a radical metamorphosis over the past seven years. One instinctive response is to dismiss the sector as over-supplied and subject to the worst of the recessionary impact. The latter has certainly devastated the US gaming stocks, whose big players such as Las Vegas Sands, Wynn Resorts and MGM Mirage all have chips on the Macau table. But their US operations, from Las Vegas to Atlantic City, have seen deep cuts to cash-flow, especially on the non-gaming side, where retail sales, shows and restaurants have all suffered from the overall economic downturn.

Macau has become the casino capital of the world, eclipsing Las Vegas and demonstrating the success of the strategy to abandon the monopoly held by Dr Stanley Ho and colleagues from 1961, and to create a more competitive oligopoly. This was done in 2002.

Key differentiators for Galaxy include:

 Diversity, demonstrable willingness to grow and learn, evolving from construction materials to small casinos and finally into the “Big Room”—Strong presence on Macau Peninsula through the StarWorld casino; a spread of “city clubs” [smaller casinos]; substantial new complex being built on Cotai Strip [reclaimed land between Taipa and Coloane]; landbank on Cotai for massive expansion should this be needed.

 The recent weakness in gaming stocks in Hong Kong follows the selloff in the US, where LVS is near a 52-week low, but this is a BUYING OPPORTUNITY for Galaxy.

 Galaxy has a number of recent achievements—it has bought back US$250m of its own debt at a deep discount [50%] to the face value; it has been awarded a land grant for a large tract of ground in Cotai, giving it virtually unlimited capacity for expansion. Negative reaction from competitors is a measure of the value.

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End of year results were better than expected. Profit was up 65% cash on hand more than doubled, debt almost halved and the dividend was up 40%.

The share price rose from 1.08 on the 8th of July 2009 to 1.69 at the end of days trading on the 9th of July 2009, an increase of 56.48% for the day. Not a bad days work at all.

Net profit increased 65% from HK$64,872,000 in 2008 to HK$106,938,000 in 2009.

Turnover increased 21% from HK$1,547,825,000 in 2008 to HK$1,869,529,000 in 2009.

The annual dividend increased from 10 cents to 14 cents per share.

Cash and bank deposits increased from HK$163,221,000 in 2008 to HK$335,164,000 in 2009. Debt was reduced from $33,194,000 to HK$19,755,000.

Marcus Maher

Chief Business Analyst – China
Note: Marcus Maher currently own shares in Allan International Holdings Ltd

Remarks : Due to reporting and updating time-lag, readers and users should exercise caution when using the data presented in this analysis. Please see the Disclaimer and the Important Notes.

End of year results will be available soon and we are expecting good news. Since our last post on the 6th of June 2009 the share price has moved from 1.02 to 1.11 back down to 0.99 and is now sitting on comfortably on 1.05. Going over the first half results once again we are reminded that profit and turnover were both up for the half year with lots of cash in the bank to ride out these uncertain times.

Net profit for the period increased to HK$54,849,000 (2007: HK$41,638,000).
Turnover increased by 36% to HK$990,948,000 (2007: HK$725,282,000) consolidated net profit increased by 32% to HK$54,849,000 (2007: HK$41,638,000). Sales to Europe increased by 41% to HK$566,368,000, turnover to America increased by 35% to HK$178,954,000, turnover to Asia increased by 29% to HK$218,254,000 and turnover to other markets increased by 19% to HK$27,372,000.

Cash held HK$115,563,000 (31 March 2008: HK$163,221,000) in cash and bank deposits, total borrowings were HK$38,452,000 (31 March 2008: HK$33,194,000).

Marcus Maher

Chief Business Analyst – China
Note: Marcus Maher currently own shares in Allan International Holdings Ltd

Remarks : Due to reporting and updating time-lag, readers and users should exercise caution when using the data presented in this analysis. Please see the Disclaimer and the Important Notes.

Intelligent analysis of Allan International Holdings Ltd, a manufacture and seller of household electrical appliances, concludes that Allan International Holdings deserves a 5 star rating:

Immediate Buy

The current share price at HKD1.02 with a Price to Earnings Ratio of 5.27 and a current dividend of 8 cents or 7.84% return is, at the time of writing, the best value for money in the Hong Kong stock market.  The previous financial years’ dividend was 11 cents representing a 10.78% return based on the current share price.  The company has a history of adjusting dividends to match company performance and cash flow requirements.  The end of year financial results are expected to be strong so we are looking for an increase in dividend payments.

Buffet and Graham love these types of companies: Net Asset Value is HKD540,827,000 with Market Capitalization of  HKD342,141,170. This represents buying a dollar of value for 63.26 cents.

Allan International Holdings Ltd – Last Updated:  5/6/2009
Issued Shares:  335,432,520 (as at 30/4/2009)
Market Capitalization: HKD 342,141,170
Financial Year End Date:  31/3/2008
Net Asset Value:  HKD 540,827,000
Net Profit (Loss):  HKD 64,872,000
Earnings per Share:  HKD 0.1934
Dividends:
30/12/2008, Int Div 2 cts,
15/08/2008, Fin Div 6 cts
27/12/2007, Int Div 4 cts,
14/08/2007, Fin Div 7 cts

Marcus Maher
Chief Business Analyst – China

Disclosure: Marcus Maher currently owns shares in Allan International Holdings Ltd.

Remarks : Due to reporting and updating time-lag, readers and users should exercise caution when using the data presented in this analysis.  Please see the Terms of Service.