(Full Divestment) Got lucky with Human Health - 3 Pointer From Downtown

 

In one of the previous post (23 January 2022), i had highlighted 4 stocks that could benefit from the HK Covid Crisis

Stock Name	24 January 2022 Share Price	22 February 2022 Share Price
Kato HK (HKEX: 2189)	0.66	0.65
Bamboo Health (HKEX: 2293)	0.85	0.97
Human Health (HKEX: 1419)	1.18	2.24
Town Health (HKEX: 3886)	0.38	0.42

Apart from Kato HK which is flat, the rest recorded gains.

After careful consideration following that post, i have initiated a position in Human Health. The analysis was rewarded as they have released a positive profit announcement on 11 February. 

In what is a very fortunate turn of event, Mr Market decided to give it a much better price and i have divested fully.

As such, I have divested fully at 2.24.

Although the PE is still low (less than 6), when i picked it it was at a PE of less than 4 and HK had more vaccination in 2H 2021 than 1H 2021. Also it was trading at close to book value (around 1.06)

Personally i feel that vaccination drive should subside in the near future as testing becomes priority and the ramp up will be ending soon. In fact the severity of the situation in Hong Kong has resulted in increased vaccination capacity which meant that it is likely more people will be vaccinated sooner.

As such, while it might perform well in 2022 1H, it is unlikely that it will perform superbly in 2022 2H unless there is 4th, 5th jab or an increased spending in outreach activities to secure more %. 

The chance for it to happen is there and its worth waiting if the price was closer to the initial purchase price of 1.18 but at current price, it is just too attractive to sell as there seems to be some near term frying.

Overall, i did not intend to hold it for a very long time as i was searching for short to mid term ideas to cover back the losses made from IGG.

Just lucky and glad that this trade has managed to cover it, in terms of time period and returns, it is probably my best (Around 1 month, 80% returns)

Update on other companies mentioned in the previous post

Town Health has also released a positive profit alert although in terms of PE, it is still trading at 10+ PE. The final result will be decided after deciding if any further impairment losses are needed from their promissory note. As the number of cases only spiked up towards the tail end of December, i am quite certain that their 1H 2022 results for Hong Kong side should be good. However, as for the China side, it is quite hard to ascertain. 

Bamboos Health released a decent set of results. It was not as good as the previous 6 months but still decent enough. With the current pandemic in HK where beds have to be outside hospitals, staffing is definitely a concern and their services will be in demand.

One thing that came to my mind was that even in endemic like Singapore, we have seen reports of healthcare staff being overworked....as such perhaps the staffing service will still be in demand in HK for a longer period of time. However, the company's corporate actions of purchasing a building and using it as a mini supermarket concept is not something that i am fond of.

(Bad Conditions at Hospitals in Hong Kong)

Kato HK should benefit due to the operations of the Expo although it is hard to ascertain its exact revenue model and number of years of contract as well as how to judge its profitability. In terms of its aged care business, it is a traditional business with margins that are slowly dropping over time and any catalyst has to come from the government side of things. However, with covid being quite serious in aged homes as well, it is unlikely anyone will be allowed to shift out of the aged homes in this period. The occupancy rate is likely anchored.

(Quarantine Beds at Asia-World Expo where Kato HK operates is full)