China Hongxing   

China Hongxing, tp 1.47 - CIMB

reply to simonking..the recent sell down to below $1 was due to dilution of shares arising from pte placement of 400mil @$1.18 each...overdone..long term is good for company as the $$$ is fund its expansion.In March,co propose a  5 for 1 stocksplit...now no news or SGX approval.Unlike BengKuang Marine 3 for 1 stocksplit and the share price is holding so well

 

wah now i see it is vol of 18888k lucky number..



funny the volume was alot but the dip was little.

 

ChinaHx had cause alot of pple wanting to leap out of the window.... I suggest if you can hold. You should hold and wait

dun buy more... I think in short term it will drop more. In long run, you might reap profits

 

any advise? bought 20 lots at $1.1 and another 20 lots at $1.02.

should i average down tomorrow? is there any hope for this counter?

 

 

 

DBS Vickers - China Hongxing Sports; Hold (Downgrade) S$1.25; Price Target : 12-Month S$ 1.25 (Prev S$ 1.00)

CHHS announced a good set of 3Q07 results that were above expectations and also an RMB2.3bn (400m new shares at S$1.18) equity raising exercise to fund its future expansion plans. These plans should help elevate the Group?s brand profile and accelerate topline growth, but it also signals intensifying competition as well as rising distribution and A&P costs. We are also of the opinion that this huge equity raising exercise is too excessive from an EPS dilution and capital structure efficiency standpoint. ROE drops to the teens post-dilution whilst net cash is projected to be over RMB1.8bn as at end FY08F. Taking into account the 19% dilution from the issuance of the new shares, valuations for the stock are now looking stretched at 32x FY08 PER and 24x FY09 PER, similar to Anta. Downgrade to HOLD with a revised target price of S$1.25, as we roll over our valuation multiple to 24x FY09 earnings.

 

CIMB - China Hongxing Sports (S$1.24) - Placement proceeds to aid expansion

Placement of 400m new shares

Hongxing placed out 400m new shares at S$1.18 each (5.14% discount to last traded price of S$1.24) to raise net proceeds of S$457.8m for the following purposes:

1. Rmb1,000m to secure retail locations for mid-sized stores
2. Rmb500m for advertising space on CCTV
3. Rmb200m for renovation and refurbishment of older retail outlets
4. Rmb100m for setting up four logistics centres
5. Rmb250m for capacity expansion
6. Rmb296m for working capital.

Plans for expansion include:

1. Opening at least 600 new stores in FY08 with at least 300 mid-sized stores. Funds will be used to secure the leases of mid-sized stores from distributors and sub-let these stores back to distributors who will continue to bear operating expenses and inventory risks. Hongxing?s rationale for doing this is to secure key retail locations. The group will be advancing 2-year rental deposits to retailers who will be subject to a 2-year payback period. Retailers pay by instalments over the two years. The cost of securing each mid-sized store is estimated at Rmb3m.

2. Increasing advertising and promotion expenses. Hongxing will be stepping up A&P to capitalise on the upcoming Beijing 2008 Olympics Games and raise brand visibility in China. As previously guided by the group, A&P expenses as a percentage of revenue will not be more than 20% in FY08 and FY09.

3. Renovate and/or relocate older Erke speciality stores. Currently, there are 2,000 first- to third-generation Erke stores and 1,700 stores which are smaller than the average store size of 60-70 sq m. The group will be extending subsidies to the retailers of the above stores for renovation according to the fourthgeneration store layout and format and/or expand store size.

4. Establish four logistics centres. Hongxing is aware of the risks associated with accelerated retail network expansion. As such, it plans to set up logistics centres in Xi?an to monitor the northwest region, Beijing to monitor the Hua Bei region, Guangzhou to monitor the Hua Nan region and Nanjing to monitor the central region. Each centre will have 10-20 personnel to monitor the performance of retailers and carry out market research.

5. Capacity expansion. Hongxing will be supporting its accelerated retail expansion with 33.5% production-capacity expansion to 23.9m pairs of shoes. It plans the build a fourth plant to house an additional line for 6m pairs of shoes. The other three plants are running at a blended utilisation rate of 70%. Based on our projections, utilisation will hit 92% in FY08. Hence, it is necessary for Hongxing to increase capacity. The new shares represent some 15.7% of the group?s enlarged share capital.

Comments

Expansion is vital for building brand equity. Hongxing?s performance has been consistent in the last 1.5 years. Plans to open logistics centres should allow it to prevent brand erosion while opening stores aggressively. Similarly, efforts to ramp up A&P expenses are reflective of its commitment to building the Erke brand.

Selling and distribution costs will be increased in FY08-09. A&P typically makes up 83-85% of selling and distribution costs. These costs in turn, make up 18-20% of total revenue. As subsidies will be given to retailers for renovation/relocation in addition to earlier anticipated A&P expenses, we have raised our assumptions for selling and distribution costs to 21.2-21.5% of total revenue for FY08-09.

EPS dilution and higher costs slightly offset by revenue increase. The placement will dilute FY08-09 EPS by 16.7%, in our estimation. However, we expect revenue to increase by 1-3% after expansion. We have also increased gross margin assumptions to reflect lower outsourcing costs. The overall impact on our EPS estimates is an 11-15% downgrade for FY08-09.

Valuation and recommendation

Target price lowered to S$1.32 from S$1.48; downgrade to Neutral from Outperform. Our new target continues to price the stock at 27 CY09 fully-diluted earnings, which is at a slight premium to the average valuation for the sports-shoe sector. Given the limited upside to our target price, we downgrade the stock to a Neutral. However, we continue to like Hongxing as a key beneficiary of the Olympics and China?s rising consumption spending.

 

may be due to downgrade by DBSV and CIMB.
 

DBSV reports and CIMB report's Links are below


http://www.remisiers.org/research//chhs191107%20tp1.25%20dbs.pdf 

http://www.remisiers.org/research//CHN-Hongxing-QT-161107%5B1.32%5D.pdf 

 

 787180or anyone, just want to know why this Share drop so much. to $1 today? Any Bad News come out ?, thanks!

 

Dilution of Share

 

0821 GMT [Dow Jones] China Hongxing Sports (BR9.SG) may fall on trade resumption given earnings dilution concerns as company plans to place out up to 400 million shares at S$1.18 each. According to offer document, size represents 18.7% of sportwear retailer's share capital, while price at 5.6% discount to last traded price of S$1.25. Firm plans to use S$457.8 million net proceeds to expand sales, distribution network, advertise products, renovate older outlets, set up 4 logistic centers, boost production capacity. Local broker says EPS will be diluted 18-19%, with 2008 EPS growth reduced to about 22-31% from about 40-50%. UOB-KayHian is placement agent. Shares halted since yesterday, no mention of when trading will resume.(FKH)

 

15 November 2007
China Hongxing Sports  (CHHS SP/CHXS.SI, OUTPERFORM - Maintained, $1.25 - Target: $1.48)
3FY07 results - Impressive margin gains
by Germaine KHONG

Above expectations. Net profit came in 8% above our expectations at Rmb90.9m (+136.7% yoy). 9M07 turnover grew 47.9% yoy to Rmb1377.4m while net profit grew 118.9% to Rmb259.7m. 9M07 net profit contributed 70% to original FY estimates. Gross margins beat our expectations, increasing 5.2% pt to 43.8%.  We see continued demand for sporting goods in China, particularly from locals in 2nd and 3rd tier cities. Although the stock has done well recently, we believe there is room for more upside . Execution remains as a major risk. Maintain Outperform with our new target price of S$1.48 (previous $1.47) based on 24x CY09 earnings.

 

Anyone have any ideal WHY China Hongxing Sports Trading Halt?????????  

 

 

safer as market is volatile, else got to preapre to hold a while

 

i recommend sell on rally when trade resume if any. can come back later

 

    SINGAPORE, Nov 16 (Reuters) - Nomura has raised its
investment rating for China Hongxing Sports  to "buy"
from "neutral" and increased the fair value to S$1.49 after the
sports shoe maker posted a more than doubling in third-quarter
netprofit.

    China Hongxing''s quarterly earnings rose to 90.9 million yuan
($12.3 million) from 38.4 million yuan a year ago.[ID:nSNBE32891]

 

today closed at 1.21 got some at 1.20 hope that it will come strong Monday... Yeah I agree this is a hit and run counter. prepare to make some but prepare to lose big if all goes bad tonight with DJ. hah

 

With such unpreditable volatile market mood swing, probably best thing to do is go in as speculator, hit and run, with some funds in hand in any event when one has to cut losses.

This is one such counter i reckon.

 

Got this counter at 1.28 and it immediately dropped to 1.24 ....then come DJ big dropped! But it remained strong and I managed to queue and let go at 1.31!  Lucky! But I think this counter got potential!

 

this stock is for investors not traders. any, this stock is quite volatile, traders also welcome. I believe the strength we will see in next yr, during Olympics

 

this one  might go upto $2.5 or more next year. the chart looks like those real money making blue chips. never heard a bad thing abou this one.

 

Nomura downgraded this counter to Neutral yesterday...