The 2014 All-Asia Research Team: Small- & Midcapitalization Stocks, No. 1: Tak Hung (Eric) Lau & team
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The 2014 All-Asia Research Team: Small- & Midcapitalization Stocks, No. 1: Tak Hung (Eric) Lau & team

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Tak Hung (Eric) Lau & team

Citi

First-Place Appearances: 7

Total Appearances: 8

Team Debut: 2007

Capturing first place for a sixth consecutive year, Citi has dominated this roster in a nearly unbroken streak since debuting on top in 2007. The firm slipped only once, in 2008, when it earned second place. Hong Kong–based Tak Hung (Eric) Lau, 43, directs this group and co-heads, with Wei (Vivian) Tao, a runner-up squad in Industrials. Investors describe his small and midcaps crew as “an experienced, stable team that provides clients with pretty wide coverage on stocks” while demonstrating “good knowledge on the companies and managements,” as one backer puts it. What’s more, this investor adds, “they’re exceptionally good stock pickers.” The researchers continue to favor Hong Kong–based China State Construction International Holdings. Among the leading builders in China, CSCI is poised to raise its market share of public housing to 5 percent from 1 percent, they advise, benefiting from Beijing’s policies on housing, urbanization and infrastructure development. In addition, they expect CSCI to receive an infrastructure asset injection from its state-owned parent. Their target price for the stock is HK$15.40, which represents a 14.1 percent upside to its late April value. Lau and his colleagues also continue to urge investors to buy Techtronic Industries Co., a leading global manufacturer of power tools that is headquartered in Hong Kong. Significant overhead and plant relocation costs from last year will not recur, they insist, and the supplier will benefit from a revitalized product scheme and sales mix aimed at highlighting higher-margin lines and capturing economies of scale, which together should contribute to an expansion of earnings margins to 60 basis points this year from 30 basis points in 2013. In late April the shares were trading at HK$23.92, and they believe fundamentals justify a price of HK$26.


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