Thursday, August 16, 2018

Inconsistency Continues To Offset HollySys's Potential

China’s HollySys Automation (HOLI) remains a frustrating stock, as the company’s inconsistent operating performance makes it a difficult name for investors to trust. Now take explicit guidance for the next year out of the mix and it becomes an even murkier situation, particularly as there is not a lot of visibility as to rail order/contract win timelines.

HollySys still has attractive opportunities. The company is gaining share in China’s process automation market and is starting to make a bigger push into factory/discrete automation. Rail orders remain consistently inconsistent, but opportunities in subways/metro should offer upside, and the M&E business could still benefit from China’s long-term One Belt One Road initiatives. Valuation really doesn’t look very demanding, but consistent execution has never been a strong point to this story, and I can understand why investors would stay clear.

Read more here:
Inconsistency Continues To Offset HollySys's Potential

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