Fair-Value Report — Cocoon Holdings (0428.HK)
Rating caps that fired
- MICRO_ILLIQUID (market cap HK$28.7M; ~HK$45k/day turnover) and TOKEN_BUY (HK$0.24M = 0.83% of market cap): these block Moderate Buy / Buy.
- Step 1b dilution cap: capped at Hold. A placing of up to 30,851,647 new shares at HK$0.155 (about 20% of the existing share capital, ~19% discount) was announced on 12 October 2026, the same day as the insider purchase. It is conditional and had not completed at the time of writing. This is the sixth placing since May 2024 (see snapshot).
- Step 1b debt / going-concern cap: capped at Hold. The company disclosed a winding-up petition (received 21 Oct 2025, ~HK$11.1M promissory-note debt, hearing set for 31 Dec 2025). I could not locate the court outcome, so I treat it as unresolved. The promissory-note balance fell from HK$13.9M to HK$2.1M by Dec 2025, which suggests substantial settlement, but that is an inference.
- Rating rule: NAV is not a floor, because ~80% of the portfolio is OTC-pink or unlisted and marked on non-observable inputs. The reported NAV has also fallen 34% in nine months.
Insider signal
- Filer: ZHANG YANGDONG (individual; per the screening data, reason 1101/1103 = on/off-exchange purchase). I did not retrieve the HKEX DI form itself; the figures below come from the automated screen.
- Event date: 12 October 2026. Price paid: HK$0.20. Size: HK$238,800 (≈1.19M shares, a +0.78 percentage-point change in holding). Resulting holding: 7.2% (≈11.1M shares of 154.26M).
- Genuine? It reads as a real open-market or off-market purchase by an individual substantial holder, not a placing subscription. But it is tiny (0.83% of market cap), was done at a price above the live price (HK$0.20 vs HK$0.186, i.e. paid 7% over the current quote), and happened on the day the company announced a placing at HK$0.155. Motive is opaque and I found no public information on this individual.
- Correction to the signal: a 7.2% holder adding 0.78pp does not demonstrate conviction about a HK$142M NAV; it is a HK$0.24M trade. It should not be read as validation of the asset marks.
Verified snapshot
| Date | NAV/share (HK$) | Source |
|---|---|---|
| 28 Feb 2025 | 1.23 | Company NAV announcement (89.3M shares) |
| 31 Aug 2025 | 1.20 | Company NAV announcement |
| 31 Dec 2025 (audited) | 1.39 | FY2025 results, 30 Mar 2026; NAV HK$178.3M, 128.5M shares |
| 30 Jun 2026 | 1.11 | Company NAV announcement; H1 2026 unrealised equity loss ~HK$33M, net loss guided ~HK$37M |
| 30 Sep 2026 | 0.92 | Company NAV announcement (154.26M shares) |
I read the FY2025 results announcement directly. The 2026 NAV and profit-alert figures come from news summaries of company announcements, not the original filings. I did not read the interim results announcement itself.
Share issuance history: placings at HK$0.10 (May 2024), HK$0.30 (Sep 2024), HK$0.17 (Jun 2025), HK$0.178 (Aug 2025), 25.7M shares at HK$0.20 (early 2026), and the pending 30.85M shares at HK$0.155. Share count has grown from ~85M (end-2024) to 154M (Sep 2026) before the pending placing.
Business
A five-person Chapter 21 investment company holding listed and unlisted securities. FY2025: revenue (dividends) HK$0.32M; profit HK$9.8M, driven by a HK$24.0M realised gain, a −HK$7.6M fair-value loss and HK$28.5M OCI revaluation of the largest unlisted holding. Debt was HK$2.1M of promissory notes; cash and broker balances HK$4.5M. There is no operating business, so earnings are purely mark-to-market.
| Holding (31 Dec 2025) | HK$M | Nature |
|---|---|---|
| Perfect Path (20%; indirectly 45% of a Thai gold mine) | 57.4 | Private; mine licences/permits still pending; no income; valued on market approach with 18.6% minority discount |
| Winchester Holding (1.05%, OTC Pink) | 40.6 | Investee reports net assets of only ~US$0.5M (Sep 2025); mark is a thin OTC quote |
| LNPR Group (5.15%, unlisted) | 19.5 | Online education, seeking OTC listing |
| GSG Group (15.8%, OTC) | 10.1 | Needle-free injection start-up |
| Chelsea Tech (4%, unlisted) | 9.6 | Metaverse/NFT, seeking OTC listing |
| Readen (7.8%, OTC Pink) / SNTE (23.4%, OTC Pink) | 6.7 / 3.8 | OTC shells/small caps |
| Illiquid subtotal | ≈147.7 (83% of NAV) | |
| Tesla | 18.5 | Liquid |
| HK blue chips (BYD, Xiaomi, Tencent, Alibaba) | ≈9.7 | Liquid (HK listed total HK$12.6M) |
| Cash and broker balances, less other liabilities | ≈−0.9 | Cash/brokers HK$4.5M; payables 3.3 + notes 2.1 |
Valuation
Method: discount-to-NAV with NAV-quality haircuts (investment holding). DCF and earnings multiples do not apply: there are no operating cash flows.
Starting point: the 30 Sep 2026 reported NAV of HK$0.92 × 154.26M = HK$141.9M. I do not have the Sep 2026 portfolio composition, so I assume the Dec 2025 liquid / illiquid split (~20% / ~80%) still roughly holds. That is an assumption, not a filed figure. Pro forma shares after the pending placing: 185.1M, with ~HK$4.7M of net proceeds.
| Scenario | Assumption | FV/share (HK$) | vs HK$0.186 |
|---|---|---|---|
| Bull | Illiquid book realised at a 25% haircut; liquid at mark; placing completes | 0.64 | +244% |
| Base | Illiquid book at a 55% haircut (OTC Pink / unlisted, thin marks, minority stakes); liquid at mark; placing completes | 0.45 | +142% |
| Bear | Illiquid book written off entirely; liquid holdings −30%; placing completes | 0.13 | −30% |
The base case is a theoretical asset value, not a price target: there is no mechanism (no buyback, no tender, no liquidation plan) to close the discount, and the company keeps issuing shares at about 20% of its NAV, which transfers value from existing to new holders. Book value is not a floor here because the marks are illiquid and have been falling.
Reverse read
Pro forma market cap at HK$0.186 is ~HK$34.4M. The liquid holdings plus net cash are worth ~HK$28M (Dec-25 composition, scaled to Sep-26 NAV) plus ~HK$4.7M of placing proceeds. The market is therefore assigning roughly HK$1–2M to ~HK$113M of carrying value in illiquid assets, i.e. close to zero. Either the marks are wrong, or the market expects further dilution and leakage. The 34% NAV decline in nine months and the repeated sub-NAV placings give some support to the market's scepticism.
Peer table
I could not retrieve a reliable, verified peer set of HK Chapter 21 / micro-cap investment companies with comparable asset quality, so I do not present a median-anchored peer table. Listed HK investment holding companies typically trade at deep discounts to reported NAV (often 40–80%); I have not verified current figures for named peers, so I make no peer-based claim. The 80% discount is at the extreme end and is consistent with a market that does not trust the marks.
Conclusion
The insider purchase is real but token in size (HK$0.24M) and made at a price above the market, on the day of a 20% dilutive placing. The headline 80% NAV discount is not a mispricing in the usual sense: ~80% of NAV is illiquid or unlisted, NAV is falling, the company repeatedly raises equity at a discount, and a creditor winding-up petition was outstanding as of the last information I found. Hold: the signal is real but non-informative, and the price is not obviously wrong given the asset quality. The rating is capped by the dilution and debt rules; absent those caps the maximum would have been Speculative Buy (base case clears +25%), not Moderate Buy.
Catalyst calendar
- Late Oct 2026 (expected): completion or lapse of the conditional placing of up to 30.85M shares at HK$0.155; the share price may anchor to that level.
- Mid Nov 2026 (typical cadence): monthly or quarterly unaudited NAV announcement; both 2026 prints so far (HK$1.11, HK$0.92) were lower than the one before.
- Unknown: outcome or next hearing of the winding-up petition; no verified date.
- Late Mar 2027 (typical): FY2026 results (FY2025 were published 30 Mar 2026); H1 2026 already shows a ~HK$37M loss.
- Undated: sale of the Perfect Path gold-mine interest, which the investee shareholders say they are open to; this is the main upside catalyst, but there is no deal or price in the filings.
Key risks
- Further dilution: the placing mandate pattern implies more issuance at or below the current price.
- Mark-to-model risk: Perfect Path (HK$57M, no licences, no income) and Winchester (HK$41M on a ~US$0.5M-net-asset company) are 55% of Dec-25 NAV.
- Winding-up petition and any other creditor claims; share transfers made after a petition can be void without a validation order, and CCASS deposits can be suspended.
- Illiquidity: ~HK$45k/day of turnover; a holder cannot exit meaningfully.
- Governance: five employees, no CEO since 2022, and an opaque individual 7.2% holder.
What would prove us wrong (to the upside): (1) a signed disposal of the Perfect Path stake at or above carrying value, paid in cash; (2) a buyback or the placing being cancelled while NAV stabilises; (3) the winding-up petition dismissed or withdrawn with debts cleared. To the downside: a NAV print below HK$0.80 or a further placing below HK$0.15.
Sources
- HKEXnews: Cocoon Holdings FY2025 annual results announcement, 30 March 2026 (read directly).
- Company NAV announcements (via TipRanks summaries): 12 Mar 2025, 15 Sep 2025, 30 Jun 2026 and 30 Sep 2026.
- Company announcements on the winding-up petition (21 Oct 2025) and 2026 profit alert (via news summaries).
- Company placing announcement of 12 October 2026 (via TipRanks summary).
- HKEX Disclosure of Interests screen data for the 12 Oct 2026 transaction; the DI form itself was not retrieved. Price from the internal market-context feed, 13 Oct 2026; I could not re-check it on AAStocks.
No redactions applied.
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