Is Yu Tak International Holdings Limited (HKG:8048) Overpaying Its CEO?

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Xia Li has been the CEO of Yu Tak International Holdings Limited (HKG:8048) since 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Yu Tak International Holdings

How Does Xia Li’s Compensation Compare With Similar Sized Companies?

According to our data, Yu Tak International Holdings Limited has a market capitalization of HK$134m, and pays its CEO total annual compensation worth HK$1.0m. (This is based on the year to December 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at HK$951k. We examined a group of similar sized companies, with market capitalizations of below HK$1.6b. The median CEO total compensation in that group is HK$1.8m.

Most shareholders would consider it a positive that Xia Li takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see, below, how CEO compensation at Yu Tak International Holdings has changed over time.

SEHK:8048 CEO Compensation, July 20th 2019
SEHK:8048 CEO Compensation, July 20th 2019

Is Yu Tak International Holdings Limited Growing?

On average over the last three years, Yu Tak International Holdings Limited has grown earnings per share (EPS) by 23% each year (using a line of best fit). In the last year, its revenue is down -13%.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end.

Has Yu Tak International Holdings Limited Been A Good Investment?

With a three year total loss of 29%, Yu Tak International Holdings Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

It appears that Yu Tak International Holdings Limited remunerates its CEO below most similar sized companies. Many would consider this to indicate that the pay is modest since the business is growing. Unfortunately, some shareholders may be disappointed with their returns, given the company’s performance over the last three years. So while we don’t think, Xia Li is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out.

In this case we may want to look deeper into the company. There are some real positives and we could see improved returns in the longer term. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Yu Tak International Holdings.

If you want to buy a stock that is better than Yu Tak International Holdings, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.