HOLI - Hollysys Undervalued Ahead Of Going Private But Risks Remain
2024-06-20 09:26:26 ET
Summary
- Shareholders voted in favor of a buyout offer from Ascendent and the CEO, but the shares trade below the offer price and there is no announced closing date.
- Current operating conditions in China are challenging for industrial automation companies, with many clients leering of committing to large capex projects amid economic turbulence.
- If the deal fails to close, I expect the shares to sell off sharply on assumptions that it means operating conditions have materially worsened for HollySys.
- I do see near-term risks from weaker industrial automation and rail infrastructure markets in China, but believe the fundamentals can support a mid-$20's standalone price long term.
The long, strange, and often frustrating odyssey of HollySys Automation Technologies ( HOLI ) may be nearing its end … or maybe not. Given the history of this company and the bad-to-inconsistent track record of communicating with shareholders, it’s hard to say for sure....
Hollysys Undervalued Ahead Of Going Private, But Risks Remain