BBMG Corp. : A good buy now? Relative to peers, maybe.

BBMG Corp. relative valuation is now UNDERVALUED. It was previously rated NEUTRAL, and has a fundamental analysis score of 66.

Our analysis is based on comparing BBMG Corp. with the following peers – China Resources Cement Holdings Limited, Tangshan Jidong Cement Co. Ltd. Class A, TPI Polene Public Co. Ltd. NVDR, Huaxin Cement Co., Ltd. Class A, China National Materials Co. Ltd. Class H, China National Building Material Co. Ltd. Class H, West China Cement Ltd. and China Tianrui Group Cement Co., Ltd. (1313-HK, 000401-CN, TPIPL.R-TH, 600801-CN, 1893-HK, 3323-HK, 2233-HK and 1252-HK).

Relative Valuation

BBMG Corp.’s price of HKD 6.54 is lower than CapitalCube’s implied price of HKD 10.85. CapitalCube believes that at these levels, BBMG Corp. is undervalued and has upside potential. Over the last 52 week period, the stock has fluctuated between HKD 4.90 and HKD 7.63.

Relative Valuation

Company Overview

  • Relative underperformance over the last year and the last month suggest a lagging position.
  • BBMG Corporation Class H trades at a lower Price/Book multiple (0.18) than its peer median (0.86).
  • We classify 2009-HK as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • 2009-HK has relatively high profit margins while operating with median asset turns.
  • Change in the company’s annual revenues seems to be coming at the expense of earnings.
  • 2009-HK‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
  • While 2009-HK‘s revenue growth in recent years has been above the peer median, the stock’s PE ratio is less than the peer median suggesting that the company’s earnings may be peaking and the market expects a decline in its growth expectations.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • 2009-HK seems to be constrained by the current level of debt.

Investment Outlook

BBMG Corp. has a fundamental score of 66 and has a relative valuation of UNDERVALUED.

BBMG Corp. is on the top left quadrant of the CapitalCube Value – Price Matrix. We classify this space a ‘Value Play’. Here, BBMG Corp. is potentially undervalued, since it trades below its CapitalCube Implied Price of 10.85. At the same time, BBMG Corp. is also fundamentally strong with a score of 66. This is a classic value stock definition.

Fundamentals Vs Relative Valuation

Drivers of Valuation

2009-HK has a Harvesting profile relative to its peers.

We classify 2009-HK as Harvesting because of the market’s low expectations of growth (PE of 1.88 compared to peer median of 8.11) despite its relatively high returns (ROE of 10.46% compared to the peer median ROE of 7.87%).

The company trades at a lower Price/Book multiple of 0.18 compared to its peer median of 0.86.

Valuation Drivers

2009-HK has moved to an Harvesting from a relatively high ROE profile at the recent year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

BBMG Corp. is engaged in the manufacture and sale of cement and modern building materials, property development, property investment, and the provision of property management services. It operates through the following segments: Cement and Ready-mixed concrete, Modern Building Materials and Commerce and Logistics, Property Development, and Property Investment and Management. The Cement and Ready-mixed concrete segment offers cement and concrete products. The Modern Building Materials and Commerce and Logistics segment providesfurniture and woods; and decorative and fitting, wall body and insulation, and refractory materials. The Property Development segment engages in real estate development, including housing and office building projects. The Property Investment and Management segment invests in and manages self-developed properties. It invests in offices, commercial units, and parking spaces; and provides security services to residential and commercial properties. The company was founded on December 22, 2005 and is headquartered in Beijing, China.

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