Cathay International Holdings

Diversified investment company Cathay International offers good growth potential, having swung to profits last year and more recently reshuffled its management team.

The full listed concern has two main business, healthcare and hotels. Cathay owns the Crowne Plaza hotel in Shenzhen, China, while its healthcare division consists of pharmaceutical business Lansen, which specialises in the treatment of autoimmune rheumatic diseases such as rheumatoid arthritis, as well as Chinese herbal medicine firm Haotian. For the year to December, Cathay made pre-tax profits of $1.9m (£1.31m), a dramatic improvement on 2008 losses of $2.1m, as turnover increased by 14% to $74.2m.

Cathay’s hotel business loses money, so the profits driver is likely to be Lansen, which Cathay floated on the Hong Kong Stock Exchange last month. Lansen looks primed to deliver in China, with a population of 1.3bn, where there is a growing healthcare market receiving substantial investment from the Chinese government (4.5% of the nation’s GDP in fact). With the Chinese government pledging to widen healthcare substantially across the population, Lansen has the opportunity to make substantive profits and already has a 22% market share in the disease modifying anti rheumatic drugs (DMARDS) industry.

Prospects at Cathay have also received a shot in the arm following the January appointment of Jin Yi Lee, previously a managing director of Fubon Banking Hong Kong and former head of corporate finance in Asia for BNP Paribas, as its new CEO.

Cathay shares, up from their 52-week trough of 17p, could show further improvement, though with no forecasts currently available, they must remain speculative fare only for now.