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Here’s a closer look at four high-flying stocks
Sometimes high-flying stocks fall due to valuation or lack of execution. Other times, hot stocks keep going up due to momentum, secular trends, or market share gains.
Among stocks listed in Hong Kong, Beijing Chunlizhengda Medical Instruments (SEHK: 1858), A-Living Services Co Ltd (SEHK: 3319), Zoomlion (SEHK: 1157), and Flat Glass Group Co Ltd (SEHK: 6865). Each did very well in 2019. All four stocks more than doubled and each have shown strong earnings growth. Let’s analyze further.
Beijing Chunlizhengda Medical Instruments
One of the best performers in Hong Kong last year, Beijing Chunlizhengda Medical Instruments’ stock more than quadrupled in 2019. Many investors bought because Beijing Chunlizhengda Medical Instruments is a leading orthopedic medical device producer in China with a special focus on joint prosthesis and spine products.
Beijing Chunlizhengda Medical Instruments still has a lot of room to grow.
For the six-month period ending June 2019, the company reported sales of RMB 375 million, up 75.9% year-on-year. Basic earnings per share was RMB0.79 for the period, up 119.4% year-on-year.
The company benefits from China’s aging population, government support for domestic joint producers, and continuous growth in healthcare expenditures.
A-Living Services Co Ltd
A-Living Services offers property management services such as property cleaning, security, repairs, greening, and gardening. The company had a great 2019, with shares rallying from HK$10.18 in the beginning of January 2019 to HK$26.9 on December 31.
For the first half of fiscal year 2019, A-Living Services sales rose 59.4% year-on-year to RMB 2.24 billion while earnings per share rose 57.7% year-on-year to RMB0.41. Looking ahead, the company hopes to expand through endogenous growth and M&A.
Zoomlion makes agricultural and engineering machinery. Shares rallied almost 140% last year as the company’s profitability improved. For the six-month period ending on June 30, Zoomlion’s diluted earnings-per-share rose to RMB 0.338 from RMB 0.1146 in the same period the prior year.
Demand for tower cranes have been a particularly bright spot for Zoomlion.
Annual sales for Zoomlion’s tower cranes have approximately doubled for four straight years.
Due to this increase, Zoomlion’s tower crane sales surpassed 10 billion yuan or US$1.43 billion for the first time last year.
In addition to a great 2019, Zoomlion has a forward dividend yield of around 4.14% at current prices.
Flat Glass Group Co Ltd
Flat Glass manufactures a variety of glass products including household glass, architectural glass, and solar PV glass. In 2019, shares zoomed up 150% as profits soared. For the first nine months of 2019, Flat Glass’ net profit rose 75.1% year-on-year to RMB508 million.
In addition to benefiting from the rise in Chinese household incomes, which increases demand for household glass, Flat Glass also benefits from the fall in solar panel prices. As solar power becomes more cost effective, demand for solar panels is expected to increase substantially.
As one of the leading manufacturers of solar PV glass, Flat Glass is in good position to capture some of the growth opportunity.
Beijing Chunlizhengda Medical Instruments, A-Living Services, Zoomlion, and Flat Glass are each worth more investigation given their 2019 earnings growth and stock performance.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Jay Yao doesn’t own shares in any companies mentioned.