Press Releases

来源 : Investors Chronicle

Origo offers Chinese takeaway

编者 : Graeme Davies 

STRENGTHS:

  • Trading at wide discount to net assets
  • Portfolio of natural resources investments in China
  • Well funded
  • Realisations confirm potential in portfolio

WEAKNESSES:

  • Risk of failure to realise investments
  • Added risk of investing in China

At the end of last year, Origo Partners was formed by the merger of Origo Sino-India and Origo Resource Partners, helping to create a more focused investment company investing in the Chinese natural resources sector. Since the merger, Origo raised $30m (£18.8m) from investors to add to its fire-power as it seeks investments in resources, renewable energy, sustainability and agriculture in the burgeoning Chinese economy.

Much of Origo’s recent focus has been on investing in resources companies in the highly prospective region of Mongolia with $4.3m committed in coal, iron ore and gold prospects there since June. The company has also formed a corporate finance venture in Mongolia to focus on deals in the natural resources sector which completed its first transaction in September.

A further $20m of opportunities have been identified in the agriculture and clean technology sectors, with $7.3m invested in a lithium-ion battery company and a plastics recycling operator. In total, Origo’s portfolio includes 20 investments in China, including interests in internet businesses.

Validation of Origo’s investment policy came in the recent Aim listing of Chinese water purification and treatment business HaloSource, which valued the company at £100m. Origo invested $10m in HaloSource in 2008 and the IPO delivered a 79 per cent uplift in the value of its original investment. Origo realised $11m in the IPO and has retained a 4.3 per cent stake. Furthermore, it recently sold a small stake in an electronic payments provider back to management for 1.4 times its original investment.

TIDM: OPP
Market: Aim
Share price: 38.5p
Market capitalisation: £116m
Exchange market size: 5,000
12-month high/low: 38.5p/15p
Average daily volume traded (last 30 trading days): 654,020
Market makers: 5
Key upcoming events: Further key investments

SUMMARY:

Origo’s team on the ground in China is well-placed to pick up further investments and has a substantial pipeline and $54m in cash awaiting deployment. Broker Liberum Capital recently estimated Origo’s net asset value per share to be 35.7p, so at the current price the shares trade on a modest premium to book value.