Hong Kong Board Has Some Potential Gems
HONG KONG -- The Hong Kong Stock Exchange created its Growth Enterprise Market five years ago to help small entrepreneurial businesses raise capital. But since then, the GEM board, as it is known, has often drawn complaints about its listing standards and policing of members. Even its stock-exchange parent seems to recognize GEM's image issues, labeling it on the exchange's Web site "A 'Buyer's Beware' Market for Informed Investors."
Despite the flak, some GEM stocks are attracting the attention of small-cap fund managers in Asia and the U.S. Several companies have performed especially well and are undervalued -- partly, says Yang Liu, Hong Kong-based portfolio manager of the Atlantis China Fund, because investors tend to automatically discount shares trading on GEM. Another reason, she says, is that brokerage firms' research divisions largely ignore GEM stocks when pitching ideas to clients.
Donald Straszheim of Straszheim Global Advisors, Santa Monica, Calif., says investors who have dismissed GEM are overlooking a few jewels amid the dross. "What you're looking for is not a viable market but good investments," he adds.
Take Superdata Software, which sells management software to small and medium-sized companies. Ms. Liu, who owns a substantial position in the China-based Superdata, says its growth prospects would have translated into higher share prices if the company was listed on the U.S. Nasdaq Stock Market.
Superdata's 2003 net profit jumped by more than one-third from 2002, and net profit in the first six months of this year more than doubled to 15.8 million yuan ($1.9 million) from 7.5 million yuan in the same period of 2003. IDG Technology Venture Investment, a U.S.-based venture capital group, owns a 21.5% stake. Additional venture capital funds have flowed in, causing Superdata's shares to soar nearly 80% since June. At the time it announced first-half results, the company's share price traded at about 23 times earnings. On Friday, the shares closed unchanged at 90 Hong Kong cents (11.5 U.S. cents).
Ms. Liu cites China's Tong Ren Tang Technologies, which sells a popular brand of patented Chinese pharmaceuticals and herbal remedies, as another investment opportunity. Last month, it reported that net profit in the first half rose 25% from one year earlier. At that time, the company traded at less than 19 times earnings. Oppenheimer Global Opportunities Fund also owns shares in Tong Ren Tang, although a spokesman for the fund manager said the firm doesn't discuss individual stocks.
One problem for the GEM board's 202 companies is that many receive almost no research coverage by analysts. Most of the listings have small market capitalizations; that, together with low trading volumes, that makes it tough for investors to buy and sell positions.
Steve Luk, fund manager at JF Asset Management in Hong Kong, says liquidity is one of his biggest concerns when deciding to invest, although in certain instances, he says he has had some concern about trading on the Hong Kong Stock Exchange's main board. For that reason, he evaluates GEM-listed companies by the same criteria he applies to main board stocks. "Normally, we don't care if a company is listed on GEM or the main board," Mr. Luk says.
For many investors, the venue matters. And the choice of boards might be a factor in price-performance.
Straszheim Global Advisors has tracked the performance of the 10 GEM-listed companies that have migrated to Hong Kong's main board in the past two years. In each case, Straszheim found the company's shares surged following the announcement of shifting their listing to the main board.
The Straszhiem data further suggests companies found on GEM suffer a discount for trading in the occasionally beleaguered market. In an August report, Mr. Straszheim urged investors to consider the opportunity presented by solid GEM companies, such as Tong Ren Tang, which might eventually seek a main board listing.
It isn't easy to companies on GEM to meet the financial requirements and move to the main board, though a spokeswoman for the Hong Kong exchange says it is considering simplifying this process.
Mr. Straszheim's study said some GEM companies started to greatly outperform the Hang Seng Index as soon as they announced their coming move to the main board. The migrants have been GEM's stars, the report said, and the investors pushed up their prices in anticipation of "an improved longer-term environment" on the main board.
But then, in most cases, prices fell just before those companies left GEM and after they first joined the main board. After that initial run-up,"prices systematically corrected. ... the speculative period is over," the report said.
The most recent company to shift from GEM, Hong Kong-based Tom Group, basically followed this pattern. It underperformed the Hang Seng in the months prior to announced its move to the main board, then its price shot up and it outperformed the index by 8% in the weeks preceding the relocation.
Then, like others that have switched markets, Tom Group shares cooled during the 30 days following the move. They dropped 6%, while the Hang Seng, by contrast, increased nearly 6%.
Three GEM companies -- CK Life Sciences International, hongkong.com and Phoenix Satellite Television -- have recently announced plans to switch boards. In his firm's report, Mr. Straszheim named 15 other GEM companies including Tong Ren Tang, Hong Kong's Golden Meditech and China's Yantai North Andre Juice that he believes satisfy the main board's listing standards. A majority of those 15, he said, have single digit price-to-earnings multiples and are projecting increased profit. He wrote that it would be a "reasonable investment strategy" to invest in all 18 companies "that we expect to make the migration -- and to bail out before the official migration is completed."
投资者忽略了创业板？
五年前，为帮助小企业融资，香港联合交易所有限公司(Hong Kong Stock Exchange, HKSE)创立了创业板市场。但从此以后，创业板在上市标准和会员制度方面屡遭责难。就连联交所似乎也认识到了创业板的形象问题，在这个市场的网页上标注：为充分了解市场的投资者而设的一个“买者自负”市场。
尽管该市场遭到猛烈抨击，但在亚洲和美国小型股基金经理眼中，一些创业板股票仍充满魅力。Atlantis中国基金驻香港的投资组合经理刘阳(Yang Liu, 音译)说，有些公司业绩特别好，股价却被严重低估，因为投资者往往会想当然地低估创业板的股票，而且券商的研究部门在给投资者提供意见时也经常会忽略创业板股票。
美国加州圣莫尼卡的独立研究机构Straszheim Global Advisors的唐纳德?斯特拉斯汉姆(Donald Straszheim)也表示，对创业板不屑一顾的投资者遗漏了“杂物堆里的很多钻石”。他补充说，你要寻找的不是完善的市场，而是理想的投资机会。
向中小企业出售管理软件的速达控股(Superdata Software)就是一例。刘阳表示，如果速达控股在美国那斯达克市场上市，其增长前景可能早已转化为更高的股价了。刘阳持有速达控股的大量股票。
速达控股2003年净利润较2002年增长三分之一有逾，今年上半年增长一倍以上，从上年同期的人民币750万元猛增至1,580万元。美国风险投资集团IDG Technology Venture Investment持有速达控股21.5%的股权。随著风险投资资金不断涌入，速达控股的股价自6月以来已上涨近80%，本益比达到23倍左右。上周五该股收盘持平于0.9港元（11.5美分）。
刘阳说，中国大陆的同仁堂科技也是一个投资机会，其专利中草药广受欢迎。上个月同仁堂科技公布上半年净利润较去年同期增长25%，同时其本益比不足19倍。Oppenheimer全球机会基金也持有同仁堂科技的股票，但其基金经理的发言人表示，公司不对任何个股置评。
很多创业板股票不被分析师跟踪，这是该市场202家公司所面临的一个严峻问题。创业板多数公司市值很小，交投清淡，投资者很难买进卖出。
怡富资产管理公司(JF Asset Management)驻香港的基金经理Steve Luk说，资金流动性是影响他投资决定的最大问题，但有时他也会对主板市场的交易感到担心。因此，他评估创业板股票和主板股票所用的标准是一样的。通常情况下他们并不在意一家公司是在创业板上市还是在主板市场上市。
但对很多投资者而言，上市地点非常重要。交易市场的选择可能直接影响到股价表现。
Straszheim Global Advisors对过去两年中转至主板市场的10只创业板股票进行了跟踪，发现每只股票都在公司宣布转板后大幅上扬。
斯特拉斯汉姆在8月份的报告中指出，投资者应该关注一下同仁堂科技等实力雄厚的公司，这些公司很可能最终寻求主板上市。
尽管香港联交所的发言人表示正在考虑简化创业板转向主板的程序，但创业板公司并不是很容易达到转板的财务要求。
斯特拉斯汉姆的研究显示，一些创业板公司一经宣布将转向主板市场，其股价马上强于大盘。报告称，计划转向主板市场的公司是创业板市场的明星，投资者基于主板市场长期前景向好的预期将这些股票大力推高。
但多数情况下，股价在这些公司离开创业板的前一天和加入创业板的第一天即告下挫。报告称，最初的上涨过后，股价自然出现调整……投机阶段已经结束。
最近一家从创业板转向主板市场的公司TOM集团(Tom Group)就基本上遵从了这种模式。消息公布前的几个月股价一直弱于大盘，公布后强劲上扬并在转至主板之前的几周超出恒生指数8%。
随后，与其他转板的股票一样，TOM集团在转板后30个交易日内跌去了6%，而恒生指数同期上涨近6%。
最近又有3家创业板公司──长江生命科技(CK Life Sciences International)、香港网和凤凰卫视──宣布计划转向主板市场。斯特拉斯汉姆在其报告中指出，相信包括同仁堂科技、香港金卫医疗科技(Golden Meditech)和大陆安德利果汁(Yantai North Andre Juice)在内的另外15家公司也有望达到主板市场上市要求。他说，这15家公司中大部分本益比只有一位数，并且预计将实现利润增长。他写道，投资这18家公司并在它们正式转板之前卖出，这应该是一个“合理的投资战略”。
