Fair-Value Report — Morimatsu International Holdings (2155.HK)
Insider / Institutional Signal
Buyer: 富国基金管理有限公司 (Fullgoal Fund Management Co., Ltd.) — one of China's largest active fund managers (~CNY 1.3T AUM as of 2024).
Nature: Open-market on/off-exchange purchase (reason code 1101/1103). Crossed the 5% substantial-shareholder threshold; new holding 6.47% (~82.3M shares). Delta: +0.74% (~9.45M shares). Trade value: approximately HKD 85.2M at ~HKD 9.01/share.
Date of disclosure: 2 July 2026. This is genuine open-market accumulation — not a placing, not an employee scheme, not an index rebalance.
Conviction caveat: Fullgoal manages both active and passive products. The motive is likely an active fund mandate (scale and concentration consistent with active conviction), but cannot be confirmed as purely discretionary. Weight this as a medium-conviction institutional signal, not a director/insider buy.
Verified Snapshot
Data recency check: Latest audited financials = FY2025 (year ended 31 December 2025), filed ~March 2026. Age at report date: ~4 months. Within the 18-month data-recency threshold. H1 2025 interims also available. No staleness flag.
Business Description
Morimatsu International is the HKEX-listed subsidiary of Japan-founded Morimatsu Group (est. 1908). It is the largest non-state-owned pressure equipment manufacturer in China by revenue, serving critical-process industries. The company designs, fabricates, installs, and services pressure vessels, reactors, heat exchangers, and integrated modular process systems.
End markets (FY2025 revenue mix, approximate):
- Pharmaceutical / Biopharmaceutical: ~25% (fastest growing; H1 2025 new orders +642% YoY)
- Chemical / Petrochemical: ~45% (mature; volume stable, pricing under pressure)
- New Energy (EV battery, electronic chemicals): ~15% (growing)
- Other (food, FMCG, semiconductor materials): ~15%
Competitive position: Collaborates with 80%+ of the world's top 20 pharma companies for international projects (per Frost & Sullivan). Expanding manufacturing into Malaysia (Phase II complete 2025), Thailand (lease signed Q4 2025). Revenue CAGR FY2021–FY2023: +31% — now in a post-COVID capex cycle normalization.
Parent: Morimatsu Industrial Co., Ltd. (森松工业株式会社) holds ~60.1%. Float: ~33% free float. Control is stable.
Valuation
Method: Three-Scenario DCF + EV/EBITDA Cross-Check + Peer Table
Morimatsu is a profitable industrial compounder with FCF (lumpy but averaging CNY ~230M over FY2022–2025 due to working capital timing). Primary method: DCF with ROIC-driven reinvestment. Cross-check: EV/EBITDA peer multiple.
WACC (CAPM, verified inputs)
| Input | Value | Source |
|---|---|---|
| Risk-free rate (China 10Y CGB) | 1.73% | TradingEconomics, 02-Jul-2026 |
| Unlevered beta (Damodaran: Machinery, Jan 2026) | 1.24 | Damodaran Global Betas, 1,553 firms |
| Levered beta (D/E 7.1%, tax 25%) | 1.31 | Computed |
| Equity Risk Premium (China, Damodaran Jan 2026) | 4.23% + 0.91% CRP | Damodaran ctryprem.html |
| Cost of equity | 8.17% | CAPM |
| Cost of debt (pre-tax; after-tax) | 3.23% / 2.42% | Rf + 150bps; tax 25% |
| Capital structure (mkt weights) | 96.1% equity / 3.9% debt | Computed |
| WACC | 7.95% | Scripts/wacc.py |
Scenario Assumptions
| Parameter | Bull (25%) | Base (50%) | Bear (25%) |
|---|---|---|---|
| Revenue CAGR Yr 1–5 | 11.4% | 6.8% | 2.6% |
| Revenue CAGR Yr 6–10 | 5.4% | 3.8% | 2.8% |
| Op. Margin Yr 1 → Yr 10 | 10.5% → 15.0% | 10.0% → 12.0% | 9.0% → 10.0% |
| ROIC | 18% | 15% | 12% |
| Terminal growth (CNY) | 3.0% | 2.5% | 2.0% |
| Narrative | Pharma +642% order surge converts; SE Asia capacity adds 15% incremental; margin mix-shift to pharma restores 15% EBIT margins. | Steady pharma recovery; chem segment stable; Malaysia contributes incrementally; margins recover modestly. | Chinese industrial capex downturn persists; overcapacity drives pricing pressure; margins stay compressed below FY2025 levels. |
DCF Output (CNY millions; computed via dcf.py)
| Scenario | Enterprise Value (CNY M) | Equity Value (CNY M) | FV / Share (CNY) | FV / Share (HKD) | TV % of EV |
|---|---|---|---|---|---|
| Bull (25%) | 18,045 | 20,531 | 16.26 | 18.77 | 75.7% |
| Base (50%) | 10,702 | 13,188 | 10.44 | 12.06 | 67.6% |
| Bear (25%) | 7,376 | 9,862 | 7.81 | 9.02 | 60.1% |
| Probability-Weighted | 11,706 | 14,192 | 11.24 | 12.97 | — |
Net debt = −CNY 2,486M (net cash). FX: 1 CNY = 1.1545 HKD (spot 02-Jul-2026). EV bridge: equity = EV − net_debt = EV + 2,486M.
EV/EBITDA Cross-Check
| EBITDA Multiple | Implied EV (CNY M) | Implied Equity / Share (CNY) | Implied Price (HKD) | Commentary |
|---|---|---|---|---|
| 8.8x (current) | 7,814 | 8.16 | 9.42 | Current market price implied multiple |
| 10.0x | 8,880 | 9.01 | 10.40 | Discount to peers; floor for quality industrial |
| 12.0x | 10,656 | 10.41 | 12.02 | Modest re-rating to low end of peer range |
| 14.0x | 12,432 | 11.81 | 13.64 | Mid-range global peer multiple |
FY2025 EBITDA = CNY 888M. Net cash = CNY 2,486M added to equity bridge.
Reverse DCF
At HKD 9.37 (CNY 8.12 per share), the market is pricing in:
— 2.94% flat revenue CAGR for 10 years (vs. our base case 5.4% avg; consensus ~11.7%; company's own FY2021–2023 CAGR of ~31%)
— OR an 8.65% flat operating margin indefinitely (vs. FY2025 actual 10.0%; base case recovery to 12%)
Both implied scenarios are more pessimistic than our bear case. The market appears to be pricing in continuing deterioration that would require margins to fall below the already-depressed FY2025 level and revenue to essentially stagnate. This is hard to reconcile with pharma order recovery (+642% H1 2025) and a net-cash balance sheet.
Peer Comparison Table
| Company | Ticker | Mkt Cap | EV/EBITDA | EV/Rev | EBITDA Margin | Rev Gr (LTM) | Notes |
|---|---|---|---|---|---|---|---|
| Morimatsu Intl | 2155.HK | USD 1.5B | 8.8x | 0.90x | 12.8% | +0.1% | Net cash; pharma recovery early |
| Alfa Laval | ALFA.ST | USD 23.9B | 15.4x | 3.2x | 17.7% | +8.0% | Premium quality, diversified |
| GEA Group | G1A.DE | USD 10.4B | ~12.6x | 1.9x | 16.3% | +1.4% | Pharma/food process equipment |
| SPX Technologies | SPXC | USD ~8B | ~14.5x | 3.1x | 23.0% | +15.0% | US industrial; higher margin |
| Peer Median (ex-target) | 14.5x | 3.1x | 16.3% | +4.7% | |||
| 2155 vs Peer Median | −39% | −71% | −3.5pp | −4.6pp |
GEA Group EBITDA and EV estimated from market cap USD 10.4B, net debt ~USD 0.6B, EBITDA margin guidance 16.3% on EUR 5.5B revenue. SPX Technologies from 2026 guidance ($2.6B revenue, $612M EBITDA midpoint). Peer EV/Revenues not directly comparable given China listing discount and lower margins.
Morimatsu trades at a 39% discount to peer median on EV/EBITDA. The discount is partly justified by: (1) lower EBITDA margins (~5pp below GEA); (2) China/HKEX listing discount; (3) near-term earnings headwinds. It is NOT justified by: (1) net cash balance sheet vs. peers carrying net debt; (2) superior revenue growth potential in pharma mix-shift; (3) SE Asia capacity expansion underway. A 10–12x EV/EBITDA re-rating (still a meaningful discount to global peers) implies HKD 10.40–12.02/share.
Conclusion & Rating
Rating: MODERATE BUY | Fair Value: HKD 12.50 | Current: HKD 9.37 (07-Jul-2026) | Upside: +33%
Blended FV of HKD 12.50 splits the DCF probability-weighted HKD 12.97 and the EV/EBITDA cross-check at 12x (HKD 12.02), reflecting uncertainty about the pace of pharma order conversion.
Bull case (25% probability, HKD 18.77): Pharma/biopharma new orders surge converts into booked revenue FY2026–FY2028. Malaysia contributes meaningfully. EBIT margins recover to 13–15% as high-value pharma mix dominates. Multiple re-rates to 14x+ EV/EBITDA.
Base case (50% probability, HKD 12.06): Modest pharma recovery, stable chemicals, gradual margin normalization to 12% EBIT by FY2028. EV/EBITDA re-rates to 10–12x as earnings visibility improves. Net cash provides downside floor.
Bear case (25% probability, HKD 9.02): China industrial capex downturn deepens. Pharma order pipeline converts slowly. Margins remain compressed. Multiple stays at 7–8x. Current price has minimal downside to bear case — limited crash risk.
Signal assessment: Fullgoal Fund Management's HKD 85M accumulation to 6.47% is a meaningful positive signal. A top-10 Chinese fund manager taking a 6%+ position above the substantial-shareholder threshold represents conviction, even if not as strong as director buying. Timing (after stock fell to HKD 6.49 post-earnings miss and recovered to ~HKD 9) suggests institutional value-hunting rather than momentum buying.
Position sizing: Appropriate as a moderate-size position (3–5% of a diversified HK equity portfolio). Limited downside to bear case; 33% upside to base FV. Do NOT size for the bull case — pharma recovery conversion is not yet confirmed.
Key Risks
- Margin compression continuing: Net margin fell from 11.5% (FY2023) to 8.6% (FY2025). If the trend continues (pricing pressure in China chemicals; competition from state-owned peers), bear case becomes more likely.
- Pharma order backlog vs. revenue recognition: +642% new orders sounds dramatic but orders take 12–18 months to convert to revenue. H1 2026 results will be the first meaningful test.
- FX risk: Revenues in CNY, listed in HKD. CNY appreciation vs HKD (already notable in 2026: 1 CNY = 1.1545 HKD vs ~1.08 historically) benefits HKD investors. Reversal would compress stated performance.
- Parent overhang: Morimatsu Industrial holds ~60%. Low free float (~33%) means the stock is illiquid; large block sales would be very disruptive.
- Working capital lumpiness: FCF was CNY 78M in FY2025 vs. CNY 722M in FY2024 — EPC-style project companies have highly volatile working capital. Headline FCF can look alarming in any given year.
- Micro/mid-cap data limitations: Limited sell-side coverage; less price discovery than a large-cap.
- Geopolitical / regulatory risk: Japanese-origin company with Chinese operations — any deterioration in Japan-China relations could affect client relationships or regulatory approvals.
Sources
- HKEX Disclosure of Interests (DI filing), 2 July 2026 — Fullgoal Fund Management 6.47% holding (via 10jqka.com.cn shareholder data, confirmed against DI portal)
- StockAnalysis.com HKG:2155 — price HKD 9.37 as of 07-Jul-2026 11:18 AM HKT; shares 1,263M diluted; FY2025 income statement
- Investing.com HK:2155 — FY2022–FY2025 income statement, balance sheet, cash flow (CNY millions)
- StockAnalysis.com HKG:2155 cash flow statement — operating CF, capex, FCF FY2021–FY2025
- TradingEconomics.com — China 10Y CGB yield 1.73% as of 02-Jul-2026
- Damodaran (pages.stern.nyu.edu) — Global Betas Jan 2026: Machinery unlevered beta 1.24; China ERP 5.14% (country risk premium 0.91%); base ERP 4.23%
- Freecurrencyrates.com — CNY/HKD = 1.1545 as of 01-Jul-2026
- SimplyWallSt — analyst consensus: revenue growth forecast ~11.7% p.a., earnings growth ~35.1% p.a., price target HKD 12.64 (consensus of 3 analysts)
- Futunn / Refindustry — Alfa Laval FY2025: SEK 69.7B revenue, 17.7% EBITA margin; EV/EBITDA 15.4x (Jun 2026)
- StockAnalysis.com ETR:G1A — GEA Group market cap USD 10.4B; EUR 5.5B revenue; 16.3% EBITDA margin
- SEC EDGAR Form 8-K — SPX Technologies 2026 guidance: revenue $2.6B, EBITDA $612M midpoint
No redactions applied.
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