Luk Fook (0590)

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(26-07-2023, 10:00 PM)specuvestor Wrote: 六 and 大 actually looks similar. Can’t fault their ingenuity 😂 to combine and have the best of both brands

What you said brings to mind a certain shoe company that has yet surpassed the real Nike 😄

I would have thought Under Armour wouldn't win. But they did.
Some action from this week:

1) Chow Sang Sang alerted with record high half year earnings, HKD 800-850 Millions, middle equals HKD 1.22 per share for 6 months.

2) CEO Wong Wai Sheung bought long positions on 31/7/2023 & 1/8/2023 (Reason 11034), increasing his stake from 43.47% to 43.94%. LF was trading between 20.25-21.20 on these days.
He previously increased his holding similarly (Reason 11034, but also on market purchases) in 2022 from 43.23% to 43.97% between 28/7/2022 and 28/10/2022, and offloading later at significantly higher prices.
Difference from last year is that he made much more smaller purchases last year for about the same increase in holdings, and that last years purchases were mostly at lower prices.
Mainland tourist arrivals in HK for July continued to grow compared to June. And as mainland tourists have not yet returned to overseas travel, it looks like the tourism recovery trend for HK will continue till the end of the year.

Retail rents are slowly recovering but still well below their historical highs (from 2012-2013). So for LF and CSS, these two factors could mean higher operating leverage in the second half of 2023 than the first. A well-managed F&B operator like Fairwood is another company I think will benefit from the above tailwinds.

Compared to the pre-covid years, HK is a shadow of its former self and property values are still falling. Mainland is suffering from lower exports due to economic weakness in its trading partners and 'de-risking.' Mainland manufacturers are reporting very poor numbers this season. Broad sentiment towards HK/mainland companies are very poor, but this could be an opportunity to pick up good companies.

At some point -- maybe 2-3 years from now -- inflation will ease, interest rates will fall, and global growth will resume. Assuming that gold prices and HK tourism continue to move higher under this scenario, the operating leverage enjoyed by the likes of LF and CSS could be even greater.
Like many other stocks trading is totally stuck & dominated by automated back and forth trading of big, mostly overseas banks and brokerages.

Only active way out (aside passively waiting for sentiment changes) are share buy backs, not necessarily large amounts, but consistently on weak days. Best utilization of cash for debt free companies trading below book value.
GSP wrote an interesting article about investing in HK in general, emphasizing the importance of buy-backs and higher pay-out ratio (incl increasing pay-out in such times), especially for family run companies.

Also includes interesting discussion of some individual stocks like Modern Dental

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