View of The Day: 420 K Wah International Holdings

On 15 December 2009, I mentioned K Wah (420): ' K Wah is an established properties developer that has its roots in Hong Kong. But its developments in Shanghai appear to be encouraging. Although the most recent result is not spectacular (Jun/2009 interim profit down 38%), prospects in the second half seem much better - sales of a Shanghai development, and the remaining units of 嘉御山 in Shatin and the holding of Galaxy Entertainment revalued. On my belief that the PRC properties market will continue to grow mildly, at current prices (HKD 2.7-2.8) that is P/E 13x, K Wah looks attractive. Anything close to HKD 2.70 is buy time.'

In the 3 months, the share price has come up and down between HKD2.90 and HKD 3.30+. It just settled at HKD 2.90 cob today. From the major indicators such as RSI and moving average (100-day 2.76 and 50-day 2.75), 2.90 appears to be too high. So my previous recommendation that 2.70 is buy time remains unchanged. Recntly Lui Chi Wo, the major shareholder, raised his shareholding to 58.39% (when price was at 2.40).

Business-wise K Wah seems to be quite active. It partnered with Sino Land (083) and acquired a piece of land in Pak Shek Kok and went with Chuang's (367) to redevelop properties on Po Shan Road. There are also many projects particularly that in Shanghai which will be released during the Exposition in the city. With p/e at 9.7x, the current price (2.90) is obviously a bit overpriced. Let's see if we can get it at around 2.70.