EPRO (HK Stock code 08086) rated STRONG BUY by HKT.
Current price $.65
Target price (12 months) $1.4
Target price (24 months) $.2.6
EPRO provides information technology contract and maintenance services, and IT software development and integration services, e-marketing services and mobile computing solutions. There will be huge demand for these products and services in the coming decade in China.
Current price $.65
Target price (12 months) $1.4
Target price (24 months) $.2.6
EPRO provides information technology contract and maintenance services, and IT software development and integration services, e-marketing services and mobile computing solutions. There will be huge demand for these products and services in the coming decade in China.
EPRO also operates e-commerce and provision of online sales platform www.dx.com which we believe have huge potential for growth and revenues as China’s on-line shopping portals are set to boom over the next decade.
DX.com is a simple, efficient shopping platform and we are very encouraged by its growth in usage to date. DX.com targets at overseas customers and sells high-quality and unique products from China to global consumers. The website has over 100,000 products for sale, across 15 categories and over 200 sub-categories. This business is growing fast and has potential to rival Amazon.com, especially as it operates internationally and has access to lower priced products. The website now has regular buyers from over 200 countries and is seeing especially strong demand from countries such as Brazil, Russia and Israel. If you have not yet seen this website take a look!
EPRO’s areas of business have the potential to be highly profitable, and we have identified EPRO as a company that is poised to benefit under China’s 12th 5 year plan over the coming 3 years, and as China, and the world increasely moves and does business on-line.
The company’s Return on Equity, and Return on Total Asset, two key ratios we look for, has grown every year since 2007. We believe this trend will accelerate over the next few years.
EPRO’s turnover and operating profits have grown strongly each year, and again we believe this trend is poised to accelerate. We are hopeful of positive news confirming this when the company reports earnings in December 2012.
Also noteworthy is that DIGITAL CHINA (HK stock code 0861) has been increasing its stake in EPRO over the last few months, as has EPRO’s chairman. Both of course are encouraging signs for the company’s stock price.
Other investors might wonder why, given EPRO’s prospects, we have not valued it’s expected stock price growth at a higher percentage compared to its current stock value. The reason for this is that based on our own assessment of the stock’s value, we believe the stock’s current price is already fairly high (which reflects that the fact that it is not just us, but other investors who already expect a lot from this company). We determine stock value based on fundamentals, and it is on this basis that we value EPRO at 1.3 per share based on currently available information (approximately double the company’s current stock value). Of course, companies like this also have the potential to see their stock price jump crazily high as and when positive news goes “mainstream” and local and foreign investors pile in wanting a piece of the action. If this happens we will carefully monitor the price vs our assessment of value, and we might then sell accordingly if we believe the stock price is overvalued.
Other investors might wonder why, given EPRO’s prospects, we have not valued it’s expected stock price growth at a higher percentage compared to its current stock value. The reason for this is that based on our own assessment of the stock’s value, we believe the stock’s current price is already fairly high (which reflects that the fact that it is not just us, but other investors who already expect a lot from this company). We determine stock value based on fundamentals, and it is on this basis that we value EPRO at 1.3 per share based on currently available information (approximately double the company’s current stock value). Of course, companies like this also have the potential to see their stock price jump crazily high as and when positive news goes “mainstream” and local and foreign investors pile in wanting a piece of the action. If this happens we will carefully monitor the price vs our assessment of value, and we might then sell accordingly if we believe the stock price is overvalued.
We will accumulate EPRO over the coming year until it hits a price of $1.3 which we consider to be fair value for this company, but may consider revaluing the company (upwards or downwards) depending on its upcoming earning’s report.
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