Money Week - UK (2021-10-08)

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moneyweek.com 8October2021 MONEYWEEK

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The Gym Group (LSE:GYM)

2020 2021

NDJ A O

Share price inpence

380

(^370360)
350
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Boohoo (Aim:Boo)
2020 2021
ON
OnlinefashionretailerBoohoo
(Aim:BOO)postedresultsforthe
sixmonthstotheendofAugustlast
week.Thesharepricepromptly
slumped,despiterecordsales
overtheperiod.AdjustedEbitdafellby
5%to£89.8m,belowinvestors’
expectations.Capitalexpenditure
forthefullyearwillbearound£ 27 5m,
10 %higherthanpredicted.Full-year
salesgrowthestimateshavealso
slipped. Boohoonow expects a
rise of between 20%and 25%,
compared with aprevious target of
25%. Thestock hasslidby34.4% in
thelast12months.
TheGymGroup(LSE:GYM)operates
around 90 gymsacrosstheUK.Its 2021
interimresultsrevealeda 21 .4%declinein
revenueforthesixmonthsto 30 June,but
thegymswerelegallyrequiredtoshutfor
over 50 %ofthetradingdays.Andsince
reopeninginApril,therehasbeen
strongdemandformemberships.Italso
reporteda 3 1.4%riseingroupadjusted
earningsbeforeinterest,tax,depreciation
andamortisation(Ebitda),andlossesfell
by 5 .4%to£ 20 .9m.Itcompletedanequity
placingearlyJulythatyielded£ 30 .3m,
whichwillfundthe 40 newsitesinits
pipeline.Theshareshaveclimbedby
12 4%overthelast 12 months.
Ifonlyyou’d investedin...
Begladyoudidn’tbuy...
How contrarian investors
can cash in on Asia
Investorsareunderstandablycautious
aboutAsianequitymarkets.Theregulatory
crackdow ninC hina,newCovid-19casesin
SoutheastAsiaandsupply-sidebottlene cks
haveresultedinAsianequit iestradingata
40%valuationdiscount toglobalequities.
Butbeneaththesurface,thereisawealth
ofat tractiveinvestme ntopportunities
acrossAsia.There gionishometomany
companieswithstrongfreecashflow
genera tionandhealthybalancesheets,
whichgivesbusinessesflexibility, and
investorsafairdegreeofcomfort.Negative
headlinescanbesc arybuttheymakethe
bestconditionsforcontrarianstockpickers
whocareaboutlonger -termoutcomes.
Themostsustain ablewaytom ake
moneyistob uycompaniesforlessthan
theyareworth.Thefollowingstocks
areallheldinth eInvescoAsiaTrust.They
areatdifferentstagesint heirtransition
fromcontrariantopopular,illustrating
howtemporaryanxietiescanleadto
signifi cantmispricings.
Playingthe c ommoditiesboom
PacificBasin (HongKong: 2343)isone
oftheworld’sleadingoperatorsofminor
bulk-cargovessels.Itisadirectbenefic iary
ofthestrongdemand
forcommoditiesat
atimewhencargo
shipsareinshort
supply,whichis
leadingtorisingfreig htrates.Itiscurrently
cheaperonap rice/earnings(p/e)basisthan
itwa s12m onthsago,despiteathreefold
increaseinitsshareprice.
Dema nd-and-supplyimbalancesmay
persis tbecausesociety’s decarbonisation
agen dadisincentivisesadditio nalsupply.
Thecompanyalsohasenduringcompetitive
advantagessuchasitslower-costfleetand
higherutilisationratesresultingfroma
broadnetworkofcustomers.
Aprofessional investor tells us where he’d put his
money. This week: Ian Hargreaves, fund manager,
InvescoAsia Trust, se lects three favourites
China’s onlinecar market revs up
Autohome(HongKong: 2518)isthe
leadingonlinedestinationforautomobile
consumersinC hina,ahugemarket.It
monetisesits66.5millionmonthlyactive
usersbys ellingadve rtisingspacetocar
makersandby matchingprospectivecar
buyerswithdealersh ips.Thesharepr ice
hasbeenweaksof arthi syearandvaluation
levelshavefallenthankstoconcer nsabout
competition.
However,Autohome’s competitive
advantagesappeartobeoverlooked.
Itshugecliente le,numberingmore thanthe
secondandthirdplayerscombined,helps
ensure highconversionra tes,which
should besustainablegiveninvestme nts
invalue-addedservicesthatarenotso
easilyreplicable.
An opportunityinrenewa bles
Ming Yang SmartEnergy(Shanghai:
601615)isaleadingwind-turbine
manufacturerinC hina.Thesignificant
valuatio ngapbetweenEuropeanand
Chineseplayershascaughtoureye;itis
partlyduetos ubsidiescomingtoanend
inChina.
Howeve r,thecount ryhasbigplansto
growitssupplyof
greenenergy:itwants
50%ofenergyto
come fromrene wabl es
by2030 asitlo oks
toreduceitscarbonemissions.Thisshould
augurwellforgrowthin renewabl es.
MingYangbenefitsfromahigh
degreeofv erticalintegration:it
manufacturesallthemajorcomponents,
suchasblades,inverters,andcontrol
systems.Ita lsobuildit sownwindfarms,
anin dustrywhichhasnowbroadly reached
gridparity.Asa resu lt,subsidiesareno
longerne eded,enablingmoreconsi stent
profit growthin future.
“Make money bybuying
companies for less than
they are worth”