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2016 All-Asia Research Team: Small- & Midcapitalization Stocks, No. 1: Tak Hung (Eric) Lau & team
Reclaiming the position it held for six years through 2014, Citi’s Hong Kong–headquartered small- and midcaps squad vaults from runner-up to first place.
Total Appearances: 10
Team Debut: 2007
Reclaiming the position it held for six years through 2014, Citi’s Hong Kong–headquartered small- and midcaps squad vaults from runner-up to first place. Director of coverageTak Hung (Eric) Lauand six teammates report on 85 regional names, roughly ten more than a year ago, and clients value the breadth of their work. “They work very hard,” one local fund manager remarks. “They do a good job following through — and sometimes they even provide good ideas that make money.” In March the researchers dubbed Hong Kong’s Techtronic Industries Co. — which manufactures a range of appliances, outdoor equipment and power tools — one of their favorite midcaps, citing earnings acceleration in the second half of 2015, which contributed to an 18 percent annual rise in net profit, to $354 million. Driving sales growth are TTI’s gains in market share through increased procurement by U.S.-based home improvement giant Home Depot, the company’s largest customer, which itself posted a 6.4 percent increase in revenue for the fiscal year through January. In addition, the researchers advise, Techtronic has consistently outpaced its main competitor, Stanley Black & Decker of the U.S., in sales expansion over the past seven years, thanks to its strengthened global presence and new products. Moreover, management’s ongoing efforts at wringing out costs have bolstered both productivity and profits, they note. Citi’s crew lifted its target price on TTI shares from HK$33.50 to HK$37.50 in March. They were trading at HK$29.35 in late April. Lau, 45, also captains a crew that earns a runner-up position on the Industrials lineup.