According to stock exchange information, Arisaig Greater China Fund has bought 1.02mn shares of Lianhua Supermarket (980) at average price of $9.499 on Mat 28, lifting its share interest from 17.98% to 18.47%. Share price has dropped 29% from peak of $13.4 in mid-January. The counter is trading at consensus 20x 2007 PER with 20% EPS growth and 17x 2008 PER with 17% EPS growth. Similar supermarket chains are trading at 23x 2007 PER. Valuation of Lianhua is undemanding. We rate it a BUY with target price of $10.7, representing 23x 2007 PER. (Kevin Yim)