DB:79S

Stock Analysis Report

Sinosoft Technology Group

Executive Summary

Sinosoft Technology Group Limited, an investment holding company, primarily provides software development and system integration services in the People's Republic of China.

Rewards

Trading at 68.3% below its fair value

Earnings are forecast to grow 17.76% per year

Earnings have grown 14.8% per year over the past 5 years

Risk Analysis

Highly volatile share price over past 3 months



Snowflake Analysis

Very undervalued with excellent balance sheet.

Share Price & News

How has Sinosoft Technology Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 79S's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

11.9%

79S

1.8%

DE Software

0.06%

DE Market


1 Year Return

-9.2%

79S

36.2%

DE Software

14.8%

DE Market

Return vs Industry: 79S underperformed the German Software industry which returned 39.3% over the past year.

Return vs Market: 79S underperformed the German Market which returned 17.1% over the past year.


Shareholder returns

79SIndustryMarket
7 Day11.9%1.8%0.06%
30 Day17.2%5.6%1.8%
90 Day4.2%10.2%7.1%
1 Year-8.3%-9.2%38.0%36.2%18.4%14.8%
3 Year-25.4%-27.7%61.7%55.2%17.4%7.0%
5 Year-30.4%-33.3%144.7%127.3%27.9%10.4%

Price Volatility Vs. Market

How volatile is Sinosoft Technology Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Sinosoft Technology Group undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 79S (€0.2) is trading below our estimate of fair value (€0.62)

Significantly Below Fair Value: 79S is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 79S is good value based on its PE Ratio (7.9x) compared to the Software industry average (41.3x).

PE vs Market: 79S is good value based on its PE Ratio (7.9x) compared to the German market (20.6x).


Price to Earnings Growth Ratio

PEG Ratio: 79S is good value based on its PEG Ratio (0.4x)


Price to Book Ratio

PB vs Industry: 79S is good value based on its PB Ratio (1.4x) compared to the DE Software industry average (3.1x).


Next Steps

Future Growth

How is Sinosoft Technology Group forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?

17.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 79S's forecast earnings growth (17.8% per year) is above the savings rate (-0.4%).

Earnings vs Market: 79S's earnings (17.8% per year) are forecast to grow faster than the German market (13.2% per year).

High Growth Earnings: 79S's earnings are forecast to grow, but not significantly.

Revenue vs Market: 79S's revenue (14% per year) is forecast to grow faster than the German market (4.8% per year).

High Growth Revenue: 79S's revenue (14% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 79S's Return on Equity is forecast to be low in 3 years time (18.4%).


Next Steps

Past Performance

How has Sinosoft Technology Group performed over the past 5 years?

14.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 79S has high quality earnings.

Growing Profit Margin: 79S's current net profit margins (33.1%) are lower than last year (37.5%).


Past Earnings Growth Analysis

Earnings Trend: 79S's earnings have grown by 14.8% per year over the past 5 years.

Accelerating Growth: 79S's earnings growth over the past year (2.2%) is below its 5-year average (14.8% per year).

Earnings vs Industry: 79S earnings growth over the past year (2.2%) underperformed the Software industry 14.6%.


Return on Equity

High ROE: 79S's Return on Equity (17.1%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Sinosoft Technology Group's financial position?


Financial Position Analysis

Short Term Liabilities: 79S's short term assets (CN¥1.4B) exceed its short term liabilities (CN¥265.2M).

Long Term Liabilities: 79S's short term assets (CN¥1.4B) exceed its long term liabilities (CN¥57.3M).


Debt to Equity History and Analysis

Debt Level: 79S's debt to equity ratio (1.4%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if 79S's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: 79S's debt is well covered by operating cash flow (1087.4%).

Interest Coverage: 79S's interest payments on its debt are well covered by EBIT (1075.7x coverage).


Balance Sheet

Inventory Level: 79S has a low level of unsold assets or inventory.

Debt Coverage by Assets: 79S's debt is covered by short term assets (assets are 68.4x debt).


Next Steps

Dividend

What is Sinosoft Technology Group's current dividend yield, its reliability and sustainability?

1.22%

Current Dividend Yield


Dividend Yield vs Market

company1.2%marketbottom25%1.4%markettop25%3.5%industryaverage1.2%forecastin3Years2.4%

Current dividend yield vs market & industry

Notable Dividend: 79S's dividend (1.24%) isn’t notable compared to the bottom 25% of dividend payers in the German market (1.38%).

High Dividend: 79S's dividend (1.24%) is low compared to the top 25% of dividend payers in the German market (3.53%).


Stability and Growth of Payments

Stable Dividend: 79S has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: 79S's dividend payments have increased, but the company has only paid a dividend for 6 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (9.8%), 79S's dividend payments are thoroughly covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 79S's dividends in 3 years are forecast to be thoroughly covered by earnings (13% payout ratio).


Next Steps

Management

What is the CEO of Sinosoft Technology Group's salary, the management and board of directors tenure and is there insider trading?

7.3yrs

Average board tenure


CEO

Yingmei Xin (52yo)

0yrs

Tenure

CN¥2,500,000

Compensation

Ms. Yingmei Xin founded Sinosoft Technology Plc in 1998 and serves as its Chief Executive Officer. Ms. Yingmei serves as the Chairlady and Chief Executive Officer at Sinosoft Technology Group Limited. She  ...


CEO Compensation Analysis

Compensation vs Market: Yingmei's total compensation ($USD362.86K) is below average for companies of similar size in the German market ($USD638.09K).

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


Board Age and Tenure

7.3yrs

Average Tenure

53.5yo

Average Age

Experienced Board: 79S's board of directors are considered experienced (7.3 years average tenure).


Insider Trading

Insider Buying: 79S insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Buy€34,29828 Nov 19
Xiaogang Wang
EntityIndividual
Role
Senior Key Executive
Senior Vice President
Shares200,000
Max Price€0.17
Buy€89,73730 Apr 19
FIL Limited
EntityCompany
Shares280,000
Max Price€0.32
Buy€63,88018 Apr 19
Yingmei Xin
EntityIndividual
Role
Chief Executive Officer
Chairlady & CEO
Shares200,000
Max Price€0.32
Buy€62,70817 Apr 19
Yingmei Xin
EntityIndividual
Role
Chief Executive Officer
Chairlady & CEO
Shares200,000
Max Price€0.31
Buy€66,98403 Apr 19
Yingmei Xin
EntityIndividual
Role
Chief Executive Officer
Chairlady & CEO
Shares200,000
Max Price€0.33
Buy€48,65828 Mar 19
Yingmei Xin
EntityIndividual
Role
Chief Executive Officer
Chairlady & CEO
Shares160,000
Max Price€0.30
Buy€48,09127 Mar 19
Yingmei Xin
EntityIndividual
Role
Chief Executive Officer
Chairlady & CEO
Shares160,000
Max Price€0.30
Buy€330,74326 Mar 19
Yingmei Xin
EntityIndividual
Role
Chief Executive Officer
Chairlady & CEO
Shares1,100,000
Max Price€0.30

Ownership Breakdown

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


Management Team

  • Maurice Ngai (57yo)

    Company Secretary

    • Yingmei Xin (52yo)

      Chairlady & CEO

      • Compensation: CN¥2.50m
    • Xiaogang Wang (56yo)

      Senior Vice President

      • Fang Xu (48yo)

        Head of Human Resource Department

        • Li Huiling Lee (45yo)

          Co-Head of Internal Audit Department

          • Sulin Ding (62yo)

            Co-Head of Internal Audit Department

            • Hui Su (39yo)

              CFO & Executive Director

              • Tenure: 1yrs

            Board Members

            • Yingmei Xin (52yo)

              Chairlady & CEO

              • Compensation: CN¥2.50m
            • Walter Kwauk (66yo)

              Independent Non Executive Director

              • Tenure: 7.3yrs
              • Compensation: CN¥151.00k
            • Choon Kang (55yo)

              Independent Non Executive Director

              • Tenure: 7.3yrs
              • Compensation: CN¥151.00k
            • Ping Zong (62yo)

              Independent Non Executive Director

              • Tenure: 7.3yrs
              • Compensation: CN¥101.00k
            • Hui Su (39yo)

              CFO & Executive Director

              • Tenure: 1yrs
            • Geng Ren (36yo)

              Non-Executive Director

              • Tenure: 0.5yrs

            Company Information

            Sinosoft Technology Group Limited's company bio, employee growth, exchange listings and data sources


            Key Information

            • Name: Sinosoft Technology Group Limited
            • Ticker: 79S
            • Exchange: DB
            • Founded: 2011
            • Industry: Application Software
            • Sector: Software
            • Market Cap: HK$2.261b
            • Listing Market Cap: HK$262.454m
            • Shares outstanding: 1.22b
            • Website: https://www.sinosoft-technology.com

            Number of Employees


            Location

            • Sinosoft Technology Group Limited
            • No. 26 Tianpu Road
            • Jiangpu Street
            • Nanjing
            • Jiangsu Province
            • China

            Listings

            TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
            1297SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDJul 2013
            79SDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJul 2013

            Biography

            Sinosoft Technology Group Limited, an investment holding company, primarily provides software development and system integration services in the People's Republic of China. It operates through four segments: Tax Software and Related Services, Low Carbon & Ecology Software and Related Services, Government Big Data Software and Related Services, and System Integration Solutions. The company offers export tax software products, consultation services, and training courses. It also provides e-government solutions and products that are used by government agencies at various administrative levels, including the ministerial, provincial, municipal, and district levels. In addition, the company offers carbon management solutions that enable government agencies or enterprises to audit, calculate, and control their greenhouse gas emissions and energy consumption. Further, it provides system integration solutions to government agencies, including information systems consultation and feasibility analysis; sourcing of systems and equipment; LAN and Web-based network design and implementation; analysis, planning, and design of integrated wiring and network systems; design and implementation of video conferencing and multimedia education systems; and system management and supervision, as well as services comprising system architectures, intuitive graphical and multimedia user interfaces, Web services, and other Internet technologies. Additionally, the company sells computer products, as well as offers related services; provides investment and advisory services; and holds properties. Sinosoft Technology Group Limited was incorporated in 2011 and is headquartered in Nanjing, China. 


            Company Analysis and Financial Data Status

            All financial data provided by Standard & Poor's Capital IQ.
            DataLast Updated (UTC time)
            Company Analysis2020/01/17 21:32
            End of Day Share Price2020/01/17 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.