SEHK:1316

Stock Analysis Report

Nexteer Automotive Group

Executive Summary

Nexteer Automotive Group Limited, an investment holding company, designs, develops, manufactures, and distributes steering and driveline systems and components for automobile manufacturers and other automotive-related companies.

Rewards

Trading at 46% below its fair value

Earnings are forecast to grow 6.8% per year

Risk Analysis

Unstable dividend track record

Highly volatile share price over past 3 months



Snowflake Analysis

Flawless balance sheet and good value.


Similar Companies

Share Price & News

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


Latest Share Price and Events

Stable Share Price: 1316's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-8.6%

1316

-3.2%

HK Auto Components

-4.1%

HK Market


1 Year Return

-47.6%

1316

-21.1%

HK Auto Components

-0.5%

HK Market

Return vs Industry: 1316 underperformed the Hong Kong Auto Components industry which returned -15.3% over the past year.

Return vs Market: 1316 underperformed the Hong Kong Market which returned 6.4% over the past year.


Shareholder returns

1316IndustryMarket
7 Day-8.6%-3.2%-4.1%
30 Day-10.6%-0.2%0.05%
90 Day-7.4%-4.2%4.3%
1 Year-46.2%-47.6%-18.4%-21.1%3.2%-0.5%
3 Year-31.5%-35.4%-14.4%-20.9%20.4%8.2%
5 Year-11.1%-18.5%34.2%19.3%19.0%-0.9%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Nexteer Automotive 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: 1316 (HK$7.1) is trading below our estimate of fair value (HK$13.15)

Significantly Below Fair Value: 1316 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 1316 is good value based on its PE Ratio (7.4x) compared to the Auto Components industry average (9.8x).

PE vs Market: 1316 is good value based on its PE Ratio (7.4x) compared to the Hong Kong market (10.5x).


Price to Earnings Growth Ratio

PEG Ratio: 1316 is poor value based on its PEG Ratio (1x)


Price to Book Ratio

PB vs Industry: 1316 is overvalued based on its PB Ratio (1.3x) compared to the HK Auto Components industry average (1x).


Next Steps

Future Growth

How is Nexteer Automotive Group forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?

6.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 1316's forecast earnings growth (6.8% per year) is above the savings rate (1.6%).

Earnings vs Market: 1316's earnings (6.8% per year) are forecast to grow slower than the Hong Kong market (11.3% per year).

High Growth Earnings: 1316's earnings are forecast to grow, but not significantly.

Revenue vs Market: 1316's revenue (4.4% per year) is forecast to grow slower than the Hong Kong market (10.2% per year).

High Growth Revenue: 1316's revenue (4.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 1316's Return on Equity is forecast to be low in 3 years time (15%).


Next Steps

Past Performance

How has Nexteer Automotive Group performed over the past 5 years?

18.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 1316 has high quality earnings.

Growing Profit Margin: 1316's current net profit margins (8.4%) are lower than last year (9.4%).


Past Earnings Growth Analysis

Earnings Trend: 1316's earnings have grown by 18.8% per year over the past 5 years.

Accelerating Growth: 1316's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 1316 had negative earnings growth (-16.3%) over the past year, making it difficult to compare to the Auto Components industry average (-0.7%).


Return on Equity

High ROE: 1316's Return on Equity (17.8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Nexteer Automotive Group's financial position?


Financial Position Analysis

Short Term Liabilities: 1316's short term assets ($1.5B) exceed its short term liabilities ($819.3M).

Long Term Liabilities: 1316's short term assets ($1.5B) exceed its long term liabilities ($568.9M).


Debt to Equity History and Analysis

Debt Level: 1316's debt to equity ratio (19.2%) is considered satisfactory.

Reducing Debt: 1316's debt to equity ratio has reduced from 86.5% to 19.2% over the past 5 years.

Debt Coverage: 1316's debt is well covered by operating cash flow (156.9%).

Interest Coverage: 1316's interest payments on its debt are well covered by EBIT (116.1x coverage).


Balance Sheet

Inventory Level: 1316 has a high level of physical assets or inventory.

Debt Coverage by Assets: 1316's debt is covered by short term assets (assets are 4.4x debt).


Next Steps

Dividend

What is Nexteer Automotive Group's current dividend yield, its reliability and sustainability?

3.86%

Current Dividend Yield


Dividend Yield vs Market

company3.9%marketbottom25%2.2%markettop25%6.2%industryaverage4.0%forecastin3Years3.4%

Current dividend yield vs market & industry

Notable Dividend: 1316's dividend (3.39%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.17%).

High Dividend: 1316's dividend (3.39%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.02%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, 1316 has been paying a dividend for less than 10 years.

Growing Dividend: 1316'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 (25%), 1316's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 1316's dividends in 3 years are forecast to be well covered by earnings (22.5% payout ratio).


Next Steps

Management

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

3.1yrs

Average management tenure


CEO

Guibin Zhao (55yo)

7.6yrs

Tenure

US$1,184,000

Compensation

Mr. Guibin Zhao has been Chief Executive Officer of Nexteer Automotive Group Limited since June 2012 and has been its Vice Chairman since June 3, 2019. Mr. Zhao is responsible for setting Nexteer's strateg ...


CEO Compensation Analysis

Compensation vs Market: Guibin's total compensation ($USD1.18M) is above average for companies of similar size in the Hong Kong market ($USD547.75K).

Compensation vs Earnings: Guibin's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Management Age and Tenure

3.1yrs

Average Tenure

53yo

Average Age

Experienced Management: 1316's management team is considered experienced (3.1 years average tenure).


Board Age and Tenure

2.1yrs

Average Tenure

53yo

Average Age

Experienced Board: 1316's board of directors are not considered experienced ( 2.1 years average tenure), which suggests a new board.


Insider Trading

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.


Management Team

  • Guibin Zhao (55yo)

    Vice Chairman & CEO

    • Tenure: 7.6yrs
    • Compensation: US$1.18m
  • Yi Fan (53yo)

    VP, Joint Company Secretary & Executive Director

    • Tenure: 7.4yrs
    • Compensation: US$584.00k
  • Tao Liu (54yo)

    President

    • Peter Ziparo (49yo)

      VP & General Counsel

      • Tenure: 3.1yrs
    • William Quigley (57yo)

      Senior VP & CFO

      • Tenure: 3.6yrs
    • Cathy Xu (49yo)

      Vice President of Global Human Resources

      • Tenure: 1.6yrs
    • Ot Benson (44yo)

      Vice President of Global Sales & Marketing

      • Tenure: 1yrs
    • Robin Milavec

      Senior VP

      • Tenure: 1yrs
    • Cameron Wang

      Investor Relations Director

      • Lynn Pavlawk

        Executive Director of Global Marketing


        Board Members

        • Simon Yick (61yo)

          Independent Non-Executive Director

          • Tenure: 2.4yrs
          • Compensation: US$65.00k
        • Guibin Zhao (55yo)

          Vice Chairman & CEO

          • Tenure: 7.6yrs
          • Compensation: US$1.18m
        • Kevin Wei (51yo)

          Independent Non-Executive Director

          • Tenure: 6.6yrs
          • Compensation: US$65.00k
        • Jian Wang (57yo)

          Non-Executive Chairman

          • Tenure: 0.6yrs
        • Yi Fan (53yo)

          VP, Joint Company Secretary & Executive Director

          • Tenure: 7.4yrs
          • Compensation: US$584.00k
        • Jianjun Liu (51yo)

          Independent Non-Executive Director

          • Tenure: 6.6yrs
          • Compensation: US$53.00k
        • Tao Liu (54yo)

          President

          • Jianxun Zhang (39yo)

            Non-Executive Director

            • Tenure: 1.8yrs
            • Compensation: US$30.00k
          • Ping Liu (51yo)

            Non-Executive Director

            • Tenure: 0.6yrs

          Company Information

          Nexteer Automotive Group Limited's company bio, employee growth, exchange listings and data sources


          Key Information

          • Name: Nexteer Automotive Group Limited
          • Ticker: 1316
          • Exchange: SEHK
          • Founded: 1906
          • Industry: Auto Parts and Equipment
          • Sector: Automobiles
          • Market Cap: HK$15.647b
          • Shares outstanding: 2.51b
          • Website: https://www.nexteer.com

          Number of Employees


          Location

          • Nexteer Automotive Group Limited
          • 1272 Doris Road
          • Auburn Hills
          • Michigan
          • 48326
          • United States

          Listings

          TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
          1316SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDOct 2013
          NTXV.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDOct 2013
          1316SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesOrdinary SharesHKHKDOct 2013
          1316SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesOrdinary SharesHKHKDOct 2013

          Biography

          Nexteer Automotive Group Limited, an investment holding company, designs, develops, manufactures, and distributes steering and driveline systems and components for automobile manufacturers and other automotive-related companies. The company offers electric power steering (EPS) products, such as column, pinion, and rack assist; EPS remanufacturing products, intermediate shafts, and modular power packs; and hydraulic power steering products, such as magnetic torque overlay, smart flow pumps, power steering pumps and reservoirs, rack and pinion steering gears, and recirculating ball steering gears. It also provides steering columns products, including power tilts and telescopes, power rakes and telescopes, one-touch adjustable columns, manual rakes and telescopes, non-adjustable columns, intermediate shafts, and transmission shifters, as well as electronics, modules, and sub-assemblies. In addition, the company offers front and rear wheel halfshafts, intermediate drive shafts, and propeller shaft constant velocity joints. Further, it provides advanced driver assistance systems and automated driving technologies comprising Steering on Demand system, Quiet Wheel Steering, and high availability EPS for resilient operational availability, as well as offers customer support and engineering center services. Nexteer Automotive Group Limited operates in North America, the Asia Pacific, Europe, the Middle East, Africa, and South America. The company was founded in 1906 and is headquartered in Auburn Hills, Michigan. Nexteer Automotive Group Limited operates as a subsidiary of Pacific Century Motors. 


          Company Analysis and Financial Data Status

          All financial data provided by Standard & Poor's Capital IQ.
          DataLast Updated (UTC time)
          Company Analysis2020/01/25 13:05
          End of Day Share Price2020/01/24 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.