SINGAPORE (July 7): UOB KayHian is maintaining its “buy” recommendation on Hotung Investment Holdings with a target price of $3.38 given the bullish outlook of Greater China’s tech space.
The management of Hotung Investment has also expressed its confidence in the company by conducting share buybacks at a price range of between $1.72 and $1.90.
In a Wednesday report, analyst Edison Chen said, “We concur with management’s experienced that Hotung Investment is undervalued at 0.5x P/B with around half of its market cap in net cash, despite a consistently profitable portfolio.”
Hotung Investment has also been delivering “solid” cumulative dividends of 66 cents per share for the past five years, which is equivalent to a 97% payout.
As management has guided that the dividend payout will continue, Chen expects the dividend yield for 2017-2018 to be 8.1% as the group is backed by a pipeline of investments and exits.
Year to date, the FTSE Taiwan Tech Index has seen a 15.8% increase due to the global tech recovery.
And the World Semiconductor Trade Statistics is also forecasting an 11.5% y-o-y market growth this year.
Currently, Hotung Investment has 200 IPO listings and is constantly on the lookout for exits and cash recycling.
“Management has guided a strong pipeline for 2017 and beyond, and we believe that HIH should be able to execute at least one exit/value unlock every year,” says Chen.
As of 11.20am, shares in Hotung Investment are trading at $2.10.
