Having a stable and potential industry portfolio, the GEX stock of GELEX Group Joint Stock Company (GELEX) is showing its attractiveness to value investors, after a sharp decline in nearly 11 months.

New difficulties reveal business potential

The current time is a good opportunity for value investors to hunt for businesses that have both financial potential and attractive valuation, and more importantly, thanks to their financial potential, businesses can quickly overcome current difficulties.

One of those stocks could be GEX because GELEX converges 3 factors that help value investors consider the long-term investment.

First, the company repurchased pre-maturity bond lots at the beginning of the year, as soon as the bond lots of Tan Hoang Minh were canceled. Specifically, statistics from May 19 to July 25, GELEX bought back VND 1,627.2 billion of pre-maturity bonds and continued to plan to buy back VND 277.7 billion of pre-maturity bonds of two bond codes TP.GEX.2020.01 and GEXH2124002. Broadly, in the first 9 months of 2022, GELEX reduced its total debt by 20.3% compared to the beginning of the year, equivalent to a decrease of VND 4,497.7 billion, to VND 17,624.4 billion, and the debt only accounted for 32.7% of total capital. To be specific, total bond debt decreased by 45.1% compared to the beginning of the year, equivalent to a decrease of VND 2,880.2 billion, to VND 3,503.3 billion and accounting for 6.5% of total capital.

Secondly, GEX stock lowered its valuation and showed downtrend signs to the bottom before the market in the recent decline. Specifically, from November 01 to November 07, GEX stock fell 76.6% from VND 48,210 to VND 11,300/stock and then recovered. As of November 24, GEX stock traded at VND 12,550/stock, but the market has only rebounded since November 15. Thus, GEX stock is showing signs of a stronger correlation with the market. According to iBoard data of SSI Securities, GEX stock is trading at VND 12,550/stock, lower than the book value of VND 14,332/stock, which is 12.4% lower than the book value.

Thirdly, GELEX leaders continued to spread the message of attachment with the enterprise by buying a large number of stocks to increase its ownership in the context that stocks are affected by market sentiment. Specifically, according to the statistics since the beginning of the year, the leaders and relatives have bought 26.85 million stocks. Based on the market value of the closing transaction date, it is estimated that the leadership team and their relatives have spent VND 583.76 billion to own 26.85 million stocks, equivalent to 3.2% of charter capital. Noticeably, Mr. Nguyen Van Tuan (General Director) and the related unit VIX Securities have bought a total of 25 million GEX stocks since the beginning of the year.

With the above three factors, GEX stock at the moment is showing signs of being stronger than the market, creating a bottom on November 07 and if you look at it broadly, from October 26 to November 07, the stock tended to move sideways and get accumulated at the bottom. Meanwhile, the VN-Index and other stocks have only showed signs of starting to rapidly increase since November 15, after the wave of forced selling stock took place from the leaders of listed companies. Thus, in terms of the correlation between GEX stock and the market, GEX stock is showing signs of bottoming before the market. Theoretically, in each wave of the market, the group of stocks leading the wave is usually a group of stocks that make a bottom before the market and make a top before the market. The fact that the stock has a stronger correlation than the market will be a reliable predictor for value investors who may consider buying and accumulating leading stocks.

The business activities of GELEX are relatively stable

GELEX is a unit operating in many segments, of which two core segments are industrial production and infrastructure through intensive investment activities, and mergers and acquisitions (M&A). In industrial production, GELEX mainly operates in the segments of electrical equipment with the ownership of many famous brands such as CADIVI Power Cables, THIBIDI Transformers, CFT Copper Wires, and HEM Motors, etc. In infrastructure, GELEX operates mainly in the segment of industrial park real estate when it owns the industrial parks of Tien Son, Yen My, Hai Yen, Yen Phong (1,2 and 3), Thuan Thanh, Dong Mai, Phu Ha, and Phong Dien, Dong Van 4, etc. For renewable energy and clean water, the Company owns GELEX Wind Power – Quang Tri, Wind Power – Huong Phung, Solar Power, Rooftop Voltage – GELEX Ninh Thuan, Bung River 4A Hydropower Plant – Phu Thanh My, Da River Clean water plant and commercial real estate. Thus, most segments such as industrial real estate, renewable energy, clean water, and electrical equipment are assessed to be relatively stable and less volatile compared to highly cyclical segments such as real estate.

According VIR