DB:LIUB

Stock Analysis Report

Executive Summary

Li & Fung Limited, an investment holding company, engages in managing the supply chain for retailers and brands worldwide.

Rewards

Trading at 41.7% below its fair value

Earnings are forecast to grow 20.45% per year

Risk Analysis

Has a high level of debt

Unstable dividend track record



Snowflake Analysis

Very undervalued average dividend payer.


Similar Companies

Share Price & News

How has Li & Fung's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: LIUB has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-4.1%

LIUB

1.4%

DE Luxury

0.07%

DE Market


1 Year Return

-29.9%

LIUB

47.4%

DE Luxury

14.8%

DE Market

Return vs Industry: LIUB underperformed the German Luxury industry which returned 51.5% over the past year.

Return vs Market: LIUB underperformed the German Market which returned 17.1% over the past year.


Shareholder returns

LIUBIndustryMarket
7 Day-4.1%1.4%0.07%
30 Day-2.1%7.1%1.4%
90 Day0.5%10.4%6.1%
1 Year-26.0%-29.9%49.7%47.4%18.4%14.8%
3 Year-68.1%-75.7%106.4%95.8%17.4%7.0%
5 Year-84.3%-89.5%275.7%231.7%27.9%10.4%

Price Volatility Vs. Market

How volatile is Li & Fung's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Li & Fung undervalued compared to its fair value and its price relative to the market?

42.0%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: LIUB (€0.1) is trading below our estimate of fair value (€0.17)

Significantly Below Fair Value: LIUB is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: LIUB is good value based on its PE Ratio (9.2x) compared to the Luxury industry average (25.7x).

PE vs Market: LIUB is good value based on its PE Ratio (9.2x) compared to the German market (20.6x).


Price to Earnings Growth Ratio

PEG Ratio: LIUB is good value based on its PEG Ratio (0.5x)


Price to Book Ratio

PB vs Industry: LIUB is good value based on its PB Ratio (0.5x) compared to the DE Luxury industry average (1.8x).


Next Steps

Future Growth

How is Li & Fung forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

20.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: LIUB's forecast earnings growth (20.5% per year) is above the savings rate (-0.4%).

Earnings vs Market: LIUB's earnings (20.5% per year) are forecast to grow faster than the German market (13.2% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: LIUB's revenue is expected to decline over the next 3 years (-1.8% per year).

High Growth Revenue: LIUB's revenue is forecast to decline over the next 3 years (-1.8% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: LIUB's Return on Equity is forecast to be low in 3 years time (5.7%).


Next Steps

Past Performance

How has Li & Fung performed over the past 5 years?

-37.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: LIUB has high quality earnings.

Growing Profit Margin: LIUB's current net profit margins (0.8%) are lower than last year (1%).


Past Earnings Growth Analysis

Earnings Trend: LIUB's earnings have declined by -37% per year over the past 5 years.

Accelerating Growth: LIUB's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: LIUB had negative earnings growth (-23.5%) over the past year, making it difficult to compare to the Luxury industry average (-0.9%).


Return on Equity

High ROE: LIUB's Return on Equity (7.2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Li & Fung's financial position?


Financial Position Analysis

Short Term Liabilities: LIUB's short term assets ($2.5B) do not cover its short term liabilities ($3.1B).

Long Term Liabilities: LIUB's short term assets ($2.5B) exceed its long term liabilities ($617.0M).


Debt to Equity History and Analysis

Debt Level: LIUB's debt to equity ratio (71.3%) is considered high.

Reducing Debt: LIUB's debt to equity ratio has increased from 28.2% to 71.3% over the past 5 years.

Debt Coverage: LIUB's debt is well covered by operating cash flow (21.3%).

Interest Coverage: LIUB's interest payments on its debt are well covered by EBIT (4x coverage).


Balance Sheet

Inventory Level: LIUB has a low level of unsold assets or inventory.

Debt Coverage by Assets: LIUB's debt is covered by short term assets (assets are 1.9x debt).


Next Steps

Dividend

What is Li & Fung's current dividend yield, its reliability and sustainability?

8.42%

Current Dividend Yield


Dividend Yield vs Market

company8.4%marketbottom25%1.4%markettop25%3.5%industryaverage1.2%forecastin3Years6.6%

Current dividend yield vs market & industry

Notable Dividend: LIUB's dividend (8.33%) is higher than the bottom 25% of dividend payers in the German market (1.38%).

High Dividend: LIUB's dividend (8.33%) is in the top 25% of dividend payers in the German market (3.53%)


Stability and Growth of Payments

Stable Dividend: LIUB's dividend payments have been volatile in the past 10 years.

Growing Dividend: LIUB's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (51.2%), LIUB's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: LIUB's dividends in 3 years are forecast to be covered by earnings (75.8% payout ratio).


Next Steps

Management

What is the CEO of Li & Fung's salary, the management and board of directors tenure and is there insider trading?

4.5yrs

Average management tenure


CEO

Spencer Theodore Fung (46yo)

5.5yrs

Tenure

US$2,056,000

Compensation

Mr. Spencer Theodore Fung has been the Group Chief Executive Officer of Li & Fung Limited since July 7, 2014 and its Executive Director of Li since July 1, 2008. Mr. Fung joined Li & Fung in 2001. He serv ...


CEO Compensation Analysis

Compensation vs Market: Spencer Theodore's total compensation ($USD2.06M) is above average for companies of similar size in the German market ($USD1.28M).

Compensation vs Earnings: Spencer Theodore's compensation has been consistent with company performance over the past year.


Management Age and Tenure

4.5yrs

Average Tenure

54.5yo

Average Age

Experienced Management: LIUB's management team is considered experienced (4.5 years average tenure).


Board Age and Tenure

7.2yrs

Average Tenure

64.5yo

Average Age

Experienced Board: LIUB's board of directors are considered experienced (7.2 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Sell€9,781,30402 Jul 19
Capital Research and Management Company
EntityCompany
Shares63,362,000
Max Price€0.15
Sell€568,00514 May 19
Capital Research and Management Company
EntityCompany
Shares3,968,000
Max Price€0.14
Buy€1,010,89914 May 19
Silchester International Investors LLP
EntityCompany
Shares7,062,000
Max Price€0.14
Sell€442,44630 Mar 19
Capital Research and Management Company
EntityCompany
Shares2,698,000
Max Price€0.16
Sell€1,210,31306 Mar 19
First Sentier Investors (Australia) IM Ltd
EntityCompany
Shares7,836,000
Max Price€0.15
Buy€854,66606 Mar 19
Silchester International Investors LLP
EntityCompany
Shares5,418,000
Max Price€0.16

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Jason Yeung (64yo)

    Group Chief Compliance & Risk Management Officer

    • Tenure: 4.5yrs
  • Joseph Phi (57yo)

    Group President

    • Tenure: 2yrs
    • Compensation: US$1.96m
  • Edward Lam (53yo)

    Chief Financial Officer

    • Tenure: 7.2yrs
  • Spencer Theodore Fung (46yo)

    CEO & Executive Director

    • Tenure: 5.5yrs
    • Compensation: US$2.06m
  • Wilson Zhu (66yo)

    Chief Operating Officer

    • Roger Young (55yo)

      Chief Human Resources Officer

      • Tenure: 3.2yrs
    • Alison Law (51yo)

      Director of Investor Relations

      • Darren Palfrey (42yo)

        Chief Digital Officer

        • Sean Coxall (54yo)

          President of Supply Chain Solutions

          • Deepika Rana (58yo)

            President of Supply Chain Solutions


            Board Members

            • John Rice (62yo)

              Independent Non-Executive Director

              • Tenure: 2yrs
              • Compensation: US$52.00k
            • Allan Wong (68yo)

              Independent Non-Executive Director

              • Tenure: 20.8yrs
              • Compensation: US$71.00k
            • Victor Fung (73yo)

              Honorary Chairman

              • Tenure: 7.7yrs
              • Compensation: US$58.00k
            • William Fung (70yo)

              Group Chairman

              • Tenure: 7.7yrs
              • Compensation: US$1.55m
            • Martin Tang (70yo)

              Independent Non Executive Director

              • Tenure: 10.9yrs
              • Compensation: US$71.00k
            • Joseph Phi (57yo)

              Group President

              • Tenure: 2yrs
              • Compensation: US$1.96m
            • Marc Compagnon (60yo)

              Non-Executive Director

              • Tenure: 5.5yrs
              • Compensation: US$2.33m
            • Spencer Theodore Fung (46yo)

              CEO & Executive Director

              • Tenure: 5.5yrs
              • Compensation: US$2.06m
            • Margaret Leung Ko (67yo)

              Independent Non Executive Director

              • Tenure: 6.8yrs
              • Compensation: US$71.00k
            • Chih Cheung (48yo)

              Independent Non-Executive Director

              • Tenure: 2.5yrs
              • Compensation: US$52.00k

            Company Information

            Li & Fung Limited's company bio, employee growth, exchange listings and data sources


            Key Information

            • Name: Li & Fung Limited
            • Ticker: LIUB
            • Exchange: DB
            • Founded: 1906
            • Industry: Apparel, Accessories and Luxury Goods
            • Sector: Consumer Durables
            • Market Cap: HK$7.087b
            • Listing Market Cap: HK$823.210m
            • Shares outstanding: 8.54b
            • Website: https://www.lifung.com

            Number of Employees


            Location

            • Li & Fung Limited
            • LiFung Tower
            • 11th Floor
            • Kowloon
            • Kowloon
            • Hong Kong

            Listings

            TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
            LFUG.FOTCPK (Pink Sheets LLC)YesCommon StockUSUSDJul 1992
            LIUBDB (Deutsche Boerse AG)YesCommon StockDEEURJul 1992
            494SEHK (The Stock Exchange of Hong Kong Ltd.)YesCommon StockHKHKDJul 1992
            494SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesCommon StockHKHKDJul 1992
            494SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesCommon StockHKHKDJul 1992
            LFUG.YOTCPK (Pink Sheets LLC)UNSPONSORED ADRUSUSDOct 2008

            Biography

            Li & Fung Limited, an investment holding company, engages in managing the supply chain for retailers and brands worldwide. The company operates through two segments, Services and Products. Its Services segment provides supply chain solutions, including product design, raw materials procurement, production and quality control, warehouse management, and last-mile delivery to retail stores or end-consumers. The Products segment engages in the onshore wholesale business. Li & Fung Limited is also involved in the distribution of security products and fireworks. In addition, the company provides management and consultancy services; and trade-related credit, accounting, and testing and technology consultation services, as well as laboratory services. Further, it provides design and marketing, freight forwarding, logistics, transportation, sourcing, export trading, accounting, management, and customs brokerage services. Further, it designs, sources, and delivers apparel, accessories, and household items. The company serves specialty stores, department stores, big box retailers, e-commerce companies, hypermarkets, off-price retailers, and clubs. It operates through a network of approximately 230 offices, 280 distribution centers, and approximately 16,800 people. Li & Fung Limited was founded in 1906 and is headquartered in Kowloon, Hong Kong. 


            Company Analysis and Financial Data Status

            All financial data provided by Standard & Poor's Capital IQ.
            DataLast Updated (UTC time)
            Company Analysis2020/01/20 20:40
            End of Day Share Price2020/01/20 00:00
            Earnings2019/06/30
            Annual Earnings2018/12/31


            Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.