Brokers’ views: Midas

This month, Midas likes the look of two stocks listed on the Hong Kong Stock Exchange, which it enthuses offer ‘good exposure to the fast-growing Asian consumer’.

First off is Haier Electronics Group Co (HEG), described as ‘one of Asia’s largest washing machine and electrical goods producers’. HEG manufactures home appliances in over 15,000 different specifications under 96 categories.

 The Midas team enthuse that ‘HEG’s revenues soared 171 per cent year-on-year in the first half of the year, achieving a compound annual growth rate of 47.3 per cent over the past five years’.

The broker adds that ‘Chinese government subsidies encouraging rural households to buy or upgrade home appliances helped HEG increase sales of washing machines and water heaters’.

With an expanding Asian middle class, HEG is well placed to capitalise on increased demand for white goods. Trading on a p/e of 17.9 times and an EV/EBITDA of 6.1 times 2011 earnings, we believe the shares look good value.   

A sporting chance
Another company taking the fancy of Midas is Anta Sports Products (ANTA), a branded sportswear company based in China. Midas argues, ‘As a result of urbanisation and increasing affluence, more of the Chinese population are demanding better living conditions and a healthier lifestyle.’

The Chinese government has been driving the development of sports through the building of infrastructure in the community, which has helped strengthen the demand for diversified sportswear products as people get more opportunities to participate in different sports.  

ANTA recently reported a 23.9 per cent year-on-year rise in 2010 net profit to RMB 155 million (or RMB 0.6221 per share) and management expect a similar growth rate in 2011. It has achieved an impressive compound annual growth rate of 60.1 per cent in earnings over the past five years.

Trading on a p/e of 16.3 times and an EV/EBITDA of 9.1 times 2011 earnings, Midas believes the shares are a buy.