Negative Enterprise Value, ~5x P/E, and Still Growing Through an Industry Recession
A compounder at a cigar-butt price
Water Oasis (HKEX: 1161) runs beauty salons, spas and medical-beauty centres in Hong Kong shopping malls under the Oasis, Glycel and related brands. It’s a simple, recurring, high-margin, family-controlled business at a price that’s just too good to be true. The company holds HK$917M of cash against a market capitalisation of roughly HK$749M, carries no debt, and owns a further HK$171M of Hong Kong investment property. Strip the cash against the market value and the enterprise value is negative. You’re paid, on paper, to take the operating business. On top of that, even giving the cash no credit, it trades at about 5x earnings, and this is a business that has grown historically and keeps growing, even through the current consumer downturn in Hong Kong.
Before you stop reading: yes, this has a path to re-rating. It’s just not another cheap Hong Kong stock that stays cheap forever. The catalysts are clear. Dividend increases that take it to a double-digit yield, and a focus on M&A that could nearly double the business. The first gives you a good base IRR: you get paid while the share price rises as local retail bids up the yield. The second is a free call option, the company buying competitors cheaply, growing earnings fast, and re-rating to a 10x multiple on much higher earnings, multibagger upside in that scenario.
And yes, insiders have been buying meaningful amounts of stock recently.
To put it simply: net profit grew about 19% in the year to September 2025 and a further 27.6% in the half to March 2026, in the teeth of a Hong Kong consumer recession. You are not paying for a bad business you are paying cigar butt price for a long term compounder.
Why is it this cheap? Because the company cut its headline dividend to retain even more cash for M&A, and a shareholder base that owned it for yield walked away, leaving a debt-free, growing business trading below its own bank balance, followed by no analysts and almost no one else. There were also some non-cash one-offs that made profitability look sharply lower than the underlying number, and reported D&A is higher than it economically should be. It screens like a P/E of 8; we’ll soon see that headline number fall below 5x.
As I’ll explain, headwinds affecting the stock are temporary: the yield will go back up (probably to the high teens), and in the meantime we hold the M&A optionality for free.
Before going into it, I want to acknowledge my great friend Gabriel, who runs Bibel Capital (2,000% gross returns since 2022), for introducing me to this idea.