DB:HSG

Stock Analysis Report

Hongkong and Shanghai Hotels

Executive Summary

The Hongkong and Shanghai Hotels, Limited, an investment holding company, engages in the ownership, development, and management of hotels and commercial and residential properties in Asia, the United States, and Europe.

Rewards

PE ratio (15.3x) is below the German market (21.1x)

Risk Analysis

Earnings are forecast to decline by an average of -38.5% per year for the next 3 years

Unstable dividend track record

Large one-off items impacting financial results

Profit margins (14.1%) are lower than last year (21%)



Snowflake Analysis

Average dividend payer and fair value.


Similar Companies

Share Price & News

How has Hongkong and Shanghai Hotels's share price performed over time and what events caused price changes?


Latest Share Price and Events

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


Market Performance


7 Day Return

1.6%

HSG

5.4%

DE Hospitality

1.7%

DE Market


1 Year Return

-21.1%

HSG

11.0%

DE Hospitality

15.0%

DE Market

Return vs Industry: HSG underperformed the German Hospitality industry which returned 11% over the past year.

Return vs Market: HSG underperformed the German Market which returned 15% over the past year.


Shareholder returns

HSGIndustryMarket
7 Day1.6%5.4%1.7%
30 Day-1.5%3.4%1.4%
90 Day0.5%-9.6%3.3%
1 Year-19.6%-21.1%15.8%11.0%18.5%15.0%
3 Year2.2%-3.5%-4.5%-17.6%17.1%6.9%
5 Year-14.6%-23.0%-7.0%-26.6%24.3%7.3%

Price Volatility Vs. Market

How volatile is Hongkong and Shanghai Hotels's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Hongkong and Shanghai Hotels undervalued compared to its fair value and its price relative to the market?

15.28x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: HSG (€0.97) is trading above our estimate of fair value (€0.26)

Significantly Below Fair Value: HSG is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: HSG is good value based on its PE Ratio (15.3x) compared to the Hospitality industry average (23.8x).

PE vs Market: HSG is good value based on its PE Ratio (15.3x) compared to the German market (21.1x).


Price to Earnings Growth Ratio

PEG Ratio: HSG's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: HSG is good value based on its PB Ratio (0.3x) compared to the DE Hospitality industry average (2.3x).


Next Steps

Future Growth

How is Hongkong and Shanghai Hotels forecast to perform in the next 1 to 3 years based on estimates from 1 analyst?

-38.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: HSG's earnings are forecast to decline over the next 3 years (-38.5% per year).

Earnings vs Market: HSG's earnings are forecast to decline over the next 3 years (-38.5% per year).

High Growth Earnings: HSG's earnings are forecast to decline over the next 3 years.

Revenue vs Market: HSG's revenue is expected to decline over the next 3 years (-0.6% per year).

High Growth Revenue: HSG's revenue is forecast to decline over the next 3 years (-0.6% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if HSG's Return on Equity is forecast to be high in 3 years time


Next Steps

  • Explore growth companies in the Consumer Services industry.

Past Performance

How has Hongkong and Shanghai Hotels performed over the past 5 years?

-0.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: HSG has a large one-off gain of HK$234.0M impacting its June 30 2019 financial results.

Growing Profit Margin: HSG's current net profit margins (14.1%) are lower than last year (21%).


Past Earnings Growth Analysis

Earnings Trend: HSG's earnings have declined by -0.8% per year over the past 5 years.

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

Earnings vs Industry: HSG had negative earnings growth (-31.5%) over the past year, making it difficult to compare to the Hospitality industry average (-36.8%).


Return on Equity

High ROE: HSG's Return on Equity (2.2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Hongkong and Shanghai Hotels's financial position?


Financial Position Analysis

Short Term Liabilities: HSG's short term assets (HK$1.7B) do not cover its short term liabilities (HK$2.4B).

Long Term Liabilities: HSG's short term assets (HK$1.7B) do not cover its long term liabilities (HK$10.4B).


Debt to Equity History and Analysis

Debt Level: HSG's debt to equity ratio (18.4%) is considered satisfactory.

Reducing Debt: HSG's debt to equity ratio has increased from 16.6% to 18.4% over the past 5 years.

Debt Coverage: HSG's debt is not well covered by operating cash flow (14.2%).

Interest Coverage: HSG's interest payments on its debt are well covered by EBIT (20.5x coverage).


Balance Sheet

Inventory Level: HSG has a high level of physical assets or inventory.

Debt Coverage by Assets: HSG's debt is not covered by short term assets (assets are 0.2x debt).


Next Steps

Dividend

What is Hongkong and Shanghai Hotels's current dividend yield, its reliability and sustainability?

2.55%

Current Dividend Yield


Dividend Yield vs Market

company2.6%marketbottom25%1.3%markettop25%3.6%industryaverage5.1%forecastin3Years2.1%

Current dividend yield vs market & industry

Notable Dividend: HSG's dividend (2.55%) is higher than the bottom 25% of dividend payers in the German market (1.32%).

High Dividend: HSG's dividend (2.55%) is low compared to the top 25% of dividend payers in the German market (3.59%).


Stability and Growth of Payments

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

Growing Dividend: HSG's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (37.2%), HSG's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: HSG's dividends in 3 years are forecast to be covered by earnings (53.3% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

9.1yrs

Average management tenure


CEO

Clement Kwok (59yo)

18yrs

Tenure

HK$16,548,000

Compensation

Mr. King Man Kwok, also known as Clement, has been the Chief Executive Officer and Managing Director of The Hongkong and Shanghai Hotels, Limited since February 1, 2002 and also serves as its Chairman of G ...


CEO Compensation Analysis

Compensation vs Market: Clement's total compensation ($USD2.13M) is above average for companies of similar size in the German market ($USD1.49M).

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


Leadership Team

NamePositionTenureCompensationOwnership
King Man Kwok
MD, CEO18yrsHK$16.55m0.046% HK$732.6k
Matthew James Lawson
CFO, Member of Group Management Board & Executive Director3.8yrsHK$8.51m0.012% HK$195.3k
Peter Camille Borer
COO, Member of Group Management Board & Executive Director15.8yrsHK$9.71m0.023% HK$365.2k
Ronald McAulay
Honorary Life President2.8yrsHK$106.00k5.17% HK$82.4m
Yi Ching Liao
Group Director of Corporate & Legal9.1yrsno datano data
Martyn P. Sawyer
Group Director of Properties & Member of Group Management Board18.1yrsHK$3.88mno data
Maria Razumich-Zec
Regional VP & Member of Group Management Board13.1yrsHK$3.70mno data
Shane Izaks
Group GM of Information Technology & Member of the Group Management Board4.5yrsno datano data
Sindy Tsui
Group Director of Human Resources & Member of Group Management Board9.1yrsno datano data
Joseph Chong
Member of Management Board1.1yrsno datano data

9.1yrs

Average Tenure

57.5yo

Average Age

Experienced Management: HSG's management team is seasoned and experienced (9.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
King Man Kwok
MD, CEO18yrsHK$16.55m0.046% HK$732.6k
Matthew James Lawson
CFO, Member of Group Management Board & Executive Director3.8yrsHK$8.51m0.012% HK$195.3k
Peter Camille Borer
COO, Member of Group Management Board & Executive Director15.8yrsHK$9.71m0.023% HK$365.2k
Ronald McAulay
Honorary Life President2.8yrsHK$106.00k5.17% HK$82.4m
Michael David Kadoorie
Non-Executive Chairman35.1yrsHK$456.00k54.62% HK$871.4m
William Elkin Mocatta
Non-Executive Director34.8yrsHK$316.00k0.0010% HK$16.6k
Andrew Clifford Winawer Brandler
Non-Executive Deputy Chairman5.8yrsHK$626.00kno data
Patrick Blackwell Paul
Independent Non-Executive Director16yrsHK$646.00kno data
Pierre Boppe
Independent Non-Executive Director10.7yrsHK$366.00k0.0018% HK$29.4k
Kwok-Po Li
Independent Non-Executive Director32.3yrsHK$406.00k0.069% HK$1.1m

15.9yrs

Average Tenure

69yo

Average Age

Experienced Board: HSG's board of directors are seasoned and experienced ( 15.9 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

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


Ownership Breakdown

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


Top Shareholders

Company Information

The Hongkong and Shanghai Hotels, Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: The Hongkong and Shanghai Hotels, Limited
  • Ticker: HSG
  • Exchange: DB
  • Founded: 1866
  • Industry: Hotels, Resorts and Cruise Lines
  • Sector: Consumer Services
  • Market Cap: HK$13.435b
  • Listing Market Cap: HK$1.595b
  • Shares outstanding: 1.63b
  • Website: https://www.hshgroup.com

Number of Employees


Location

  • The Hongkong and Shanghai Hotels, Limited
  • St. George’s Building
  • 8th Floor
  • Central
  • Hong Kong

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
HKSH.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
45SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDJan 1992
HSGDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
45SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesOrdinary SharesHKHKDJan 1992
45SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesOrdinary SharesHKHKDJan 1992
HKSH.YOTCPK (Pink Sheets LLC)ADRUSUSDNov 2008

Biography

The Hongkong and Shanghai Hotels, Limited, an investment holding company, engages in the ownership, development, and management of hotels and commercial and residential properties in Asia, the United States, and Europe. It operates through three segments: Hotels, Commercial Properties, and Clubs and Services. The Hotels segment is involved in the operation of hotels; and leasing of commercial shopping arcades and office premises located within the hotel buildings. The Commercial Properties segment engages in the development, leasing, and sale of luxury residential apartments; and leasing of retail and office premises, as well as operating food and beverage outlets in such premises. The Clubs and Services segment operates golf courses, as well as The Peak Tram, a tramway; wholesales and retails food and beverage products; and offers laundry services, and management and consultancy services. The company is also involved in the wholesale and retail of merchandise; provision of dry cleaning, and marketing services; lending and borrowing of funds; and operation of golf clubs, as well as in resort and property investment activities. In addition, it offers tourism, leisure, and other services; and operates Peninsula Boutiques. The company was formerly known as The Hongkong Hotel Company, Limited. The Hongkong and Shanghai Hotels, Limited was founded in 1866 and is headquartered in Central, Hong Kong. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/15 21:26
End of Day Share Price2020/02/14 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.