This afternoon I added mid-cap sports wear retailer Xtep (HK:1368) to the private portfolio, paying an average of HK$4.94 per share (including transaction costs).
Xtep's share price had fallen along with the market generally and in reaction to issues at other participants in the sector to the point where the stock represents (IMHO) good value even if the company does not fully meet growth expectations and excellent value if it does. Specifically, the company offers a trailing dividend yield of 4.4% and PE of 14. Operating cash flow is strong by most measures and, crucially, significantly higher than expansion related capex. Earnings and dividends are expected to improve in the current and next financial years as the company expands its network of outlets and as overhead expenses shrink as a percentage of total expenses. Concerns over rising labour costs are (again, IMHO) likely to be more than offset by workers' increased income resulting in increased consumer spending.
The balance sheet is also solid with no debt and RMB2.4 billion in cash and equivalents as at the most recent interim balance date (30 June, 2010).
As an aside, once I got past the large number of gloss pictures, the annual and interim reports were very well written - giving a clear picture of the company's position and strategy with a nearly complete absence of the vague and unspecific or irrelevant statements that clutter so many corporate reports.