Head-To-Head Survey: OFS Capital (NASDAQ:OFS) versus Morgan Stanley China A Share Fund (NYSE:CAF)

Morgan Stanley China A Share Fund (NYSE:CAF) and OFS Capital (NASDAQ:OFS) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, risk, dividends, valuation and profitability.

Institutional and Insider Ownership

10.8% of OFS Capital shares are held by institutional investors. 0.5% of OFS Capital shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Morgan Stanley China A Share Fund and OFS Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Morgan Stanley China A Share Fund	$71.21 million	N/A	N/A	N/A	N/A
OFS Capital	$40.69 million	1.23	-$33.09 million	($1.65)	-2.25

Morgan Stanley China A Share Fund has higher revenue and earnings than OFS Capital.

Dividends

Morgan Stanley China A Share Fund pays an annual dividend of $0.32 per share and has a dividend yield of 1.7%. OFS Capital pays an annual dividend of $0.68 per share and has a dividend yield of 18.3%. OFS Capital pays out -41.2% of its earnings in the form of a dividend. OFS Capital has increased its dividend for 3 consecutive years. OFS Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and target prices for Morgan Stanley China A Share Fund and OFS Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Morgan Stanley China A Share Fund	0	0	0	0	0.00
OFS Capital	1	1	0	0	1.50

OFS Capital has a consensus price target of $7.00, indicating a potential upside of 88.17%. Given OFS Capital’s stronger consensus rating and higher probable upside, analysts clearly believe OFS Capital is more favorable than Morgan Stanley China A Share Fund.

Profitability

This table compares Morgan Stanley China A Share Fund and OFS Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Morgan Stanley China A Share Fund	N/A	N/A	N/A
OFS Capital	-62.24%	7.46%	2.67%

Summary

OFS Capital beats Morgan Stanley China A Share Fund on 9 of the 11 factors compared between the two stocks.

About Morgan Stanley China A Share Fund

Morgan Stanley China A Share Fund, Inc. is a closed ended equity mutual fund launched and managed by Morgan Stanley Investment Management Inc. It is co-managed by Morgan Stanley Investment Management Company. The fund invests in the public equity markets of China. It seeks to invest in the stocks of companies operating across diversified sectors. The fund invests in the growth stocks of companies. It employs fundamental analysis with bottom-up stock picking approach to create its portfolio. The fund benchmarks the performance of its portfolio against the Morgan Stanley Capital International China A Share Index. Morgan Stanley China A Share Fund, Inc. was formed on July 6, 2006 and is domiciled in the United States.

About OFS Capital

OFS Capital Corporation is a business development company specializing in direct and fund investments as well as add-on acquisitions. It provides flexible capital solutions primarily through debt capital and to a lesser extent, minority equity investments serving the needs of U.S.-based middle-market companies across a broad array of industries. It does not invest in operational turnarounds or start-up businesses. For direct, it specializes in debt and structured equity investments, recapitalizations and refinancing, management and leveraged buyouts, acquisition financings, ownership transition, shareholder liquidity events, growth capital, independent sponsor transactions, ESOPs, and minority investments in the lower middle market companies. It invests in the aerospace and defense, business services, consumer products and services, construction & building, durable goods, capital equipment, automotive, food and beverage, healthcare & pharmaceutical, specialty chemicals, transportation cargo and logistics, value added distribution, franchising, and industrial and niche manufacturing sectors. The firm invests in companies based in United States. It seeks to invest between $3 million and $35 million, revenues between $15 million and $300 million, annual EBITDA between $5 million and $50 million, and Enterprise value between $10 million and $500 million. The firm seeks to invest in companies with debt investment values between $5 million and $25 million. The fund uses senior secured, unitranche loans, first-lien, second lien, subordinated/ mezzanine loans, warrants, and preferred equity securities and common equity securities. It prefers to take a minority as well as majority stake in the investments made. It also co-invests with its partners for additional capital.