Value Partners chief keeps it real

Cheah Cheng Hye hails from Malaysia and owns a car with a vanity plate spelling out "PENANG" (the chief minister of Penang state is known to use the vehicle whenever he comes to Hong Kong).

Which is apropos of very little, except that Penangites are renowned value hunters, and this is also the investment principle of Value Partners, the Hong Kong fund management firm Cheah co-founded and heads.

Born in the 1950s to a working-class family, Cheah instinctively favours non-flashy stocks that offer tangible value and are overlooked by the wider market and therefore undervalued.

For example, Value Partners owns 7 per cent of the local hot-pot chain Tao Heung. Cheah likes the company because it meets the needs of the public.

He says the chain is firmly part of the real economy, selling billions of meals each year to Hong Kong and mainland diners. It is not glitzy but it is popular and its clients are loyal. The profits consistently roll in. "This is the type of company that we like," he says.

Value Partners' flagship Classic Fund is almost entirely invested in China equities - lately a challenging asset class. China was a great horse to back up to the global financial crisis, but it has become trickier with slowing economic growth.