Sun Hung Kai (BST:SHK) - Share price, News & Analysis

Q: What is the Fair Price of SHK when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

SHK (€0.43) is trading below our estimate of [[fair value]] (€1.4)

SHK fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	3/6
Past Performance	1/6
Financial Health	3/6
Dividends	3/6

SHK Stock Overview

Sun Hung Kai & Co. Limited, an investment holding company, provides financial services in Hong Kong and the People’s Republic of China.

Rewards

Trading at 69% below our estimate of its fair value

Earnings are forecast to grow 14.89% per year

Earnings have grown 20.3% per year over the past 5 years

Risk Analysis

Dividend of 7.18% is not well covered by earnings

Volatile share price over the past 3 months

Large one-off items impacting financial results

Sun Hung Kai Competitors

Multitude

XTRA:FRU

€55.7m

Grenke

XTRA:GLJ

€1.2b

AURELIUS Equity Opportunities SE KGaA

XTRA:AR4

€636.6m

MLP

XTRA:MLP

€615.8m

Price History & Performance

Summary of all time highs, changes and price drops for Sun Hung Kai
Historical stock prices
Current Share Price	HK$0.43
52 Week High	HK$0.54
52 Week Low	HK$0.41
Beta	0.58
1 Month Change	-1.36%
3 Month Change	2.84%
1 Year Change	4.33%
3 Year Change	24.14%
5 Year Change	-21.09%
Change since IPO	17.30%

Shareholder Returns

	SHK	DE Consumer Finance	DE Market
7D	-0.5%	0.6%	0.6%
1Y	4.3%	-31.2%	-20.0%

Return vs Industry: SHK exceeded the German Consumer Finance industry which returned -31.5% over the past year.

Return vs Market: SHK exceeded the German Market which returned -20.8% over the past year.

Price Volatility

Is SHK's price volatile compared to industry and market?
SHK volatility
SHK Average Weekly Movement	8.9%
Consumer Finance Industry Average Movement	5.7%
Market Average Movement	5.6%
10% most volatile stocks in DE Market	10.4%
10% least volatile stocks in DE Market	2.8%

Stable Share Price: SHK is more volatile than 75% of German stocks over the past 3 months, typically moving +/- 9% a week.

Volatility Over Time: SHK's weekly volatility (9%) has been stable over the past year, but is still higher than 75% of German stocks.

About the Company

Founded	Employees	CEO	Website
1969	1,738	Seng Huang Lee	https://www.shkco.com

Sun Hung Kai & Co. Limited, an investment holding company, provides financial services in Hong Kong and the People’s Republic of China. The company operates through Consumer Finance, Private Credit, Mortgage Loans, Investment Management, and Group Management and Support segments. It offers unsecured loan to individuals and businesses through branches and online platforms; funding solutions to corporates, investment funds, and high net worth individuals; and first mortgage and second mortgage loans to property owners, as well as customized financing solutions to property investors.

Sun Hung Kai Fundamentals Summary

How do Sun Hung Kai's earnings and revenue compare to its market cap?
SHK fundamental statistics
Market Cap	HK$7.14b
Earnings (TTM)	HK$2.81b
Revenue (TTM)	HK$3.00b

2.5x

P/E Ratio

2.4x

P/S Ratio

Is SHK overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
SHK income statement (TTM)
Revenue	HK$3.00b
Cost of Revenue	HK$243.90m
Gross Profit	HK$2.76b
Other Expenses	-HK$54.90m
Earnings	HK$2.81b

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

Aug 17, 2022

Earnings per share (EPS)	1.43
Gross Margin	91.88%
Net Profit Margin	93.71%
Debt/Equity Ratio	65.0%

How did SHK perform over the long term?

See historical performance and comparison

Dividends

7.2%

Current Dividend Yield

18%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is SHK undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for SHK?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for SHK. This is calculated by dividing SHK's market cap by their current preferred multiple.
What is SHK's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	HK$7.14b

SHK key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	n/a
Enterprise Value/EBITDA	n/a
PEG Ratio	0.2x

Price to Earnings Ratio vs Peers

How does SHK's PE Ratio compare to its peers?

SHK PE Ratio vs Peers

The above table shows the PE ratio for SHK vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	14.1x
FRU Multitude	20.7x	26.9%	€55.7m
GLJ Grenke	12.4x	14.2%	€1.2b
AR4 AURELIUS Equity Opportunities SE KGaA	14.7x	13.7%	€636.6m
MLP MLP	8.6x	-0.02%	€615.8m
SHK Sun Hung Kai	2.5x	14.9%	€7.1b

Price-To-Earnings vs Peers: SHK is good value based on its Price-To-Earnings Ratio (2.5x) compared to the peer average (14.1x).

Price to Earnings Ratio vs Industry

How does SHK's PE Ratio compare vs other companies in the European Consumer Finance Industry?

Price-To-Earnings vs Industry: SHK is good value based on its Price-To-Earnings Ratio (2.5x) compared to the European Consumer Finance industry average (9.2x)

Price to Earnings Ratio vs Fair Ratio

What is SHK's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

SHK PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	2.5x
Fair PE Ratio	20x

Price-To-Earnings vs Fair Ratio: SHK is good value based on its Price-To-Earnings Ratio (2.5x) compared to the estimated Fair Price-To-Earnings Ratio (20x).

Share Price vs Fair Value

What is the Fair Price of SHK when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: SHK (€0.43) is trading below our estimate of fair value (€1.4)

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

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but there are not enough analysts covering the stock to determine statistical confidence in agreement.

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Future Growth

How is Sun Hung Kai forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

14.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: SHK's forecast earnings growth (14.9% per year) is above the savings rate (-0.01%).

Earnings vs Market: SHK's earnings (14.9% per year) are forecast to grow faster than the German market (8.4% per year).

High Growth Earnings: SHK's earnings are forecast to grow, but not significantly.

Revenue vs Market: SHK's revenue (8.7% per year) is forecast to grow faster than the German market (4.7% per year).

High Growth Revenue: SHK's revenue (8.7% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: SHK's Return on Equity is forecast to be low in 3 years time (12%).

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Past Performance

How has Sun Hung Kai performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

20.3%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: SHK has a large one-off gain of HK$2.6B impacting its December 31 2021 financial results.

Growing Profit Margin: SHK's current net profit margins (93.7%) are lower than last year .

Past Earnings Growth Analysis

Earnings Trend: SHK's earnings have grown significantly by 20.3% per year over the past 5 years.

Accelerating Growth: SHK's earnings growth over the past year (10.4%) is below its 5-year average (20.3% per year).

Earnings vs Industry: SHK earnings growth over the past year (10.4%) underperformed the Consumer Finance industry 27.6%.

Return on Equity

High ROE: SHK's Return on Equity (11.6%) is considered low.

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Financial Health

How is Sun Hung Kai's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: SHK's short term assets (HK$29.9B) exceed its short term liabilities (HK$12.2B).

Long Term Liabilities: SHK's short term assets (HK$29.9B) exceed its long term liabilities (HK$8.1B).

Debt to Equity History and Analysis

Debt Level: SHK's net debt to equity ratio (20.4%) is considered satisfactory.

Reducing Debt: SHK's debt to equity ratio has increased from 46.9% to 65% over the past 5 years.

Debt Coverage: SHK's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: Insufficient data to determine if SHK's interest payments on its debt are well covered by EBIT.

Balance Sheet

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Dividend

What is Sun Hung Kai current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

7.18%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: SHK's dividend (7.18%) is higher than the bottom 25% of dividend payers in the German market (1.46%).

High Dividend: SHK's dividend (7.18%) is in the top 25% of dividend payers in the German market (4.47%)

Stability and Growth of Payments

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

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

Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (18.2%), SHK's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: SHK is paying a dividend but the company has no free cash flows.

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Management

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

6.8yrs

Average management tenure

CEO

Seng Huang Lee (48 yo)

15.58yrs

Tenure

HK$75,580,000

Compensation

Mr. Seng Huang Lee has been the Non-Independent Executive Chairman at Mulpha Australia Limited since December 2003. He serves as Strategic Advisor at ClearVue Partners. Mr. Lee has been the Group Executive...

CEO Compensation Analysis

Compensation vs Market: Seng Huang's total compensation ($USD9.63M) is above average for companies of similar size in the German market ($USD1.33M).

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

Leadership Team

Experienced Management: SHK's management team is seasoned and experienced (6.8 years average tenure).

Board Members

Experienced Board: SHK's board of directors are considered experienced (7.8 years average tenure).

Ownership

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

Insider Trading Volume

Insider Buying: SHK insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

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

Data	Last Updated (UTC time)
Company Analysis	2022/08/10 00:00
End of Day Share Price	2022/08/10 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31