Chiho Enviromental 976 HKChiho is a HK listed company that focuses on metal recycing such as copper, steel, and other metals. It has businesses in mainland China, Hong Kong, US (Liberty Metal), and Europe (Stolz). Prior to the US-China trade war and Covid, the company market cap was approx USD$800-900m and its EBITDA in 2018 of approx USD$100M. Revenue from 2019-first half of 2020 took a major hit from Covid 19. The stock went from approx HKD4-5.00 in 2018 to around HKD0.40 today. It seems the HK market has forgotten about this stock in the tech wave.
However, the turnaround in the metal market has already occured. Comparable metal recycling companies such as Steel Dynamics has risen nearly 50% in the last 4-6 months on the back of booming metal prices for copper and economies re-opening again from stimulus.
This metals boom has been shown in Chiho's financials. In the first half of 2020, it recorded gross profit of HK314m. It has recently released unaudited financials for 2020, and gross profit came in at approx of HK910M. This would imply thast the second half of 2020 gross profit doubled in growth. EBITDA came in at HK360m or US$D46m. Based on 10x EBITDA trading multiple, that would imply a market cap of approx $460M with allot of upside. It's current market is approx USD$80-90m.
As a company that is well positioned to taker advantage for the end of life for cars boom that needs to be recycled and the need for metal demad for infrastructure projects around the world, Chiho on the HK market offers a rare opportunity to invest in a company that has market share in Europe, US, South East Asia and in China.
