Webb-site issues a bubble warning on marble miner ArtGo (3313), which is up 812% since the end of May and now trades at 24x estimated net tangible assets, making a HK$29bn bubble.

Lose your marbles
15 September 2019

Sensible investors should avoid ArtGo Holdings Ltd (3313), a miner of marble stones. At the closing price of HK$9.48 on Friday (13-Sep-2019), it had a market capitalisation of HK$29.37bn. Since the end of May, it has gained 812%.

Based on the interim results at 30-Jun-2019, net tangible assets were CNY931m (HK$1061m). Shares outstanding were 2871m, for net tangible assets of $0.37 per share.

Since the half-year-end, it has issued new shares for 2 acquisitions. It issued 63.1m shares to acquire net assets of CNY10.7m (HK$12.5m) and a shareholder loan of CNY20.6m (HK$23.4m) in the first acquisition, and 164.2m shares to acquire a company which ultimately owned 2 Shanghai residential properties in the second transaction, which it valued at CNY121m (HK$133m), issuing the shares at $0.81 per share in both cases.

So putting that all together, there are net tangible assets of about HK$1230m, and outstanding shares of about 3099m, for net tangible assets of HK$0.40 per share. So the stock is trading at about 24x net tangible assets. In our concentration analysis, the top 10 CCASS accounts (banks and brokers) hold 84.03%.

Group revenue for the half year to 30-Jun was just CNY47.9m, generating a loss of CNY29.0m. The stock has never paid a dividend since its 30-Dec-2013 listing.

Caveat emptor.

© vnintl.com, 2019

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