Hosa International Ltd. : A good buy now? Relative to peers, maybe.

Hosa International Ltd. relative valuation is now UNDERVALUED. It was previously rated OVERVALUED, and has a fundamental analysis score of 88.

Our analysis is based on comparing Hosa International Ltd. with the following peers – Eagle Nice International Holdings Ltd., Win Hanverky Holdings Limited and Infinity Financial Group (Holdings) Limited (2368-HK, 3322-HK and 1152-HK).

Relative Valuation

Hosa International Ltd.’s price of HKD 3.35 is lower than CapitalCube’s implied price of HKD 5.93. CapitalCube believes that at these levels, Hosa International Ltd. is undervalued and has upside potential. Over the last 52 week period, the stock has fluctuated between HKD 2.12 and HKD 3.77.

Relative Valuation

Company Overview

  • Relative outperformance over the last year is in contrast to the more recent underperformance.
  • Hosa International Limited currently trades at a higher Price/Book ratio (2.70) than its peer median (1.76).
  • 2200-HK‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • 2200-HK‘s relatively high profit margins are burdened by relative asset inefficiency.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • 2200-HK‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • While 2200-HK‘s revenues in recent years have grown faster than the peer median, the market gives the stock a PE ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • 2200-HK currently does not have any debt.

Investment Outlook

Hosa International Ltd. has a fundamental score of 88 and has a relative valuation of UNDERVALUED.

Hosa International Ltd. is on the top left quadrant of the CapitalCube Value – Price Matrix. We classify this space a ‘Value Play’. Here, Hosa International Ltd. is potentially undervalued, since it trades below its CapitalCube Implied Price of 5.93. At the same time, Hosa International Ltd. is also fundamentally strong with a score of 88. This is a classic value stock definition.

Fundamentals Vs Relative Valuation

Drivers of Valuation

The market seems to expect 2200-HK to maintain its relatively high returns.

2200-HK‘s operating performance is higher than the median of its chosen peers (ROE of 26.43% compared to the peer median ROE of 4.25%) but the market does not seem to expect higher growth relative to peers (PE of 10.93 compared to peer median of 11.76) but simply to maintain its relatively high rates of return.

The company currently trades at a higher Price/Book ratio of 2.70 compared to its peer median of 1.76.

Valuation Drivers

2200-HK has maintained its relatively high ROE profile from the prior 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

Hosa International Ltd. engages in the design and produces mid-to-high end sportswear products, which includes swimwear, fitness wear, sports underwear and accessories. It operates through five segments: Swimwear-Hosa, Swimwear-Water Cube, Fitness Wear-Hosa, Sports Underwear-Hosa and Accessories-Hosa. The Swimwear-Hosa segment engages in the design, manufacturing and wholesale of swimwear Hosa products. The Swimwear-Water Cube segment engages in the design, manufacturing and wholesale of swimwear-Water Cube products. The Fitness wear-Hosa segment engages in the design, manufacturing and wholesale of fitness wear products. The Sports Underwear-Hosa segment engages in the design, manufacturing and wholesale of sports underwear products. The Accessories-Hosa segment engages in the wholesale of swim and indoor sports accessories. Hosa International was founded on September 2, 2010 and is headquartered in Hong Kong.

Disclaimer

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