SEHK:118

Stock Analysis Report

Cosmos Machinery Enterprises

Executive Summary

Cosmos Machinery Enterprises Limited, an investment holding company, manufactures and sells machineries in Hong Kong, Mainland China, other Asia-Pacific countries, North America, and Europe.

Rewards

PE ratio (8.6x) is below the Hong Kong market (10.1x)

Risk Analysis

Unstable dividend track record

Large one-off items impacting financial results

Profit margins (1.3%) are lower than last year (3.3%)

Shareholders have been diluted in the past year

+ 1 more risk


Snowflake Analysis

Adequate balance sheet and fair value.

Share Price & News

How has Cosmos Machinery Enterprises's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 118 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

10.3%

118

4.6%

HK Machinery

1.7%

HK Market


1 Year Return

-39.6%

118

24.7%

HK Machinery

-2.9%

HK Market

Return vs Industry: 118 underperformed the Hong Kong Machinery industry which returned 24.7% over the past year.

Return vs Market: 118 underperformed the Hong Kong Market which returned -2.9% over the past year.


Shareholder returns

118IndustryMarket
7 Day10.3%4.6%1.7%
30 Day-1.5%-2.1%-4.8%
90 Day6.7%12.1%3.4%
1 Year-36.8%-39.6%28.4%24.7%0.7%-2.9%
3 Year-33.0%-36.0%63.5%53.1%15.3%3.6%
5 Year-42.3%-44.8%64.9%50.6%15.9%-3.5%

Price Volatility Vs. Market

How volatile is Cosmos Machinery Enterprises's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Cosmos Machinery Enterprises undervalued compared to its fair value and its price relative to the market?

8.58x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: 118 (HK$0.32) is trading above our estimate of fair value (HK$0.24)

Significantly Below Fair Value: 118 is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: 118 is good value based on its PE Ratio (8.6x) compared to the Machinery industry average (10.1x).

PE vs Market: 118 is good value based on its PE Ratio (8.6x) compared to the Hong Kong market (10.1x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate 118's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: 118 is good value based on its PB Ratio (0.2x) compared to the HK Machinery industry average (1x).


Next Steps

Future Growth

How is Cosmos Machinery Enterprises forecast to perform in the next 1 to 3 years based on estimates from 0 analysts?

13.6%

Forecasted Capital Goods industry annual growth in earnings


In this section we usually present revenue and earnings growth projections based on the consensus estimates of professional analysts to help investors understand the company’s ability to generate profit. But as Cosmos Machinery Enterprises has not provided enough past data and has no analyst forecast, its future earnings cannot be reliably calculated by extrapolating past data or using analyst predictions.

This is quite a rare situation as 97% of companies covered by SimplyWall St do have past financial data.


Next Steps

Past Performance

How has Cosmos Machinery Enterprises performed over the past 5 years?

10.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 118 has a large one-off gain of HK$24.6M impacting its June 30 2019 financial results.

Growing Profit Margin: 118's current net profit margins (1.3%) are lower than last year (3.3%).


Past Earnings Growth Analysis

Earnings Trend: 118 has become profitable over the past 5 years, growing earnings by 10.6% per year.

Accelerating Growth: 118's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 118 had negative earnings growth (-63.4%) over the past year, making it difficult to compare to the Machinery industry average (7.3%).


Return on Equity

High ROE: 118's Return on Equity (2.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Cosmos Machinery Enterprises's financial position?


Financial Position Analysis

Short Term Liabilities: 118's short term assets (HK$1.9B) exceed its short term liabilities (HK$1.3B).

Long Term Liabilities: 118's short term assets (HK$1.9B) exceed its long term liabilities (HK$87.6M).


Debt to Equity History and Analysis

Debt Level: 118's debt to equity ratio (26.8%) is considered satisfactory.

Reducing Debt: 118's debt to equity ratio has reduced from 30.6% to 26.8% over the past 5 years.


Balance Sheet

Inventory Level: 118 has a high level of physical assets or inventory.

Debt Coverage by Assets: 118's debt is covered by short term assets (assets are 5x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: 118 is profitable, therefore cash runway is not a concern.

Forecast Cash Runway: 118 is profitable, therefore cash runway is not a concern.


Next Steps

Dividend

What is Cosmos Machinery Enterprises's current dividend yield, its reliability and sustainability?

6.25%

Current Dividend Yield


Dividend Yield vs Market

company6.3%marketbottom25%2.3%markettop25%6.3%industryaverage2.5%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: 118's dividend (6.25%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.27%).

High Dividend: 118's dividend (6.25%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.34%).


Stability and Growth of Payments

Stable Dividend: 118 has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: 118's dividend payments have increased, but the company has only paid a dividend for 9 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (53.6%), 118's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

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

2.6yrs

Average management tenure


CEO

Freeman Tang (41yo)

6.6yrs

Tenure

HK$4,445,000

Compensation

Mr. Yu Tang, also known as Freeman, has been the Chief Executive Officer of Cosmos Machinery Enterprises Ltd. since July 01, 2013. Mr. Tang has been an Executive Director of Cosmos Machinery Enterprises Lt ...


CEO Compensation Analysis

Compensation vs Market: Freeman's total compensation ($USD572.30K) is above average for companies of similar size in the Hong Kong market ($USD225.53K).

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


Leadership Team

NamePositionTenureCompensationOwnership
To Tang
Chairman and Head of Policy Making & Significant Investments22.4yrsHK$2.84m1% HK$2.8m
Yu Tang
CEO & Executive Director6.6yrsHK$4.45mno data
Yiu Ming Wong
Executive Vice Chairman5.1yrsHK$10.15m1.1% HK$3.0m
Zheqi Mei
Executive Director1.5yrsHK$1.62mno data
Yuk Lun Yeung
Consultant0.8yrsno datano data
Wing Yan Man
Company Secretary1.4yrsno datano data
Kar Shun Yip
Managing Director of Shenzhen Gainbase Printed Circuit Board Limited0yrsno datano data
Kwong Ho
Consultant3.8yrsno datano data

2.6yrs

Average Tenure

63yo

Average Age

Experienced Management: 118's management team is considered experienced (2.6 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
To Tang
Chairman and Head of Policy Making & Significant Investments22.4yrsHK$2.84m1% HK$2.8m
Yu Tang
CEO & Executive Director6.6yrsHK$4.45mno data
Yiu Ming Wong
Executive Vice Chairman5.1yrsHK$10.15m1.1% HK$3.0m
Zheqi Mei
Executive Director1.5yrsHK$1.62mno data
Wai Wah Kan
Non-Executive Director21.8yrsHK$60.00k0.016% HK$43.6k
Tak Yin Cheng
Independent Non-Executive Director13.1yrsHK$60.00k0.16% HK$449.9k
Shuk Fan Yeung
Independent Non-Executive Director15.7yrsHK$168.00kno data
Jinping Qu
Non-Executive Director13.4yrsno datano data
Zhi Wei Huang
Independent Non-Executive Director7.3yrsno datano data
Wei Sem Ho
Independent Non-Executive Director9.2yrsno datano data

11.1yrs

Average Tenure

63.5yo

Average Age

Experienced Board: 118's board of directors are seasoned and experienced ( 11.1 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 been diluted in the past year, with total shares outstanding growing by 20.1%.


Top Shareholders

Company Information

Cosmos Machinery Enterprises Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Cosmos Machinery Enterprises Limited
  • Ticker: 118
  • Exchange: SEHK
  • Founded: 1958
  • Industry: Industrial Machinery
  • Sector: Capital Goods
  • Market Cap: HK$275.818m
  • Shares outstanding: 861.93m
  • Website: https://www.cosmel.com

Number of Employees


Location

  • Cosmos Machinery Enterprises Limited
  • Billion Plaza 2
  • 10th Floor
  • Cheung Sha Wan
  • Kowloon
  • Hong Kong

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
118SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDJan 1992

Biography

Cosmos Machinery Enterprises Limited, an investment holding company, manufactures and sells machineries in Hong Kong, Mainland China, other Asia-Pacific countries, North America, and Europe. The company operates in four segments: Trading of Industrial Consumables, Manufacturing of Plastic Processing Products, Manufacturing of Machinery, and Processing and Trading of Printed Circuit Boards. Its machinery products include two-platen injection molding, servo-driven injection molding, all-electric high precision injection molding, special purpose injection molding, multi-material injection molding, rubber injection, extrusion line, hydraulic press, CNC turret punching, CNC brake press, and CNC shearing machines. The company’s plastic processing products comprise aseptic food packaging products and tableware, IML products, plastic cutlery and containers, plastic mannequins, plastic spare parts for washing machines and automobiles, high precision figurines, and various other plastic spare parts. It also trades in spring steel wires and special alloy materials, screws and fasteners, abrasive products, electric and pneumatic tools, production facility accessories, hydraulic motors and pumps, stepping motors, servo motors, cooling fans, 3 phase induction motors, frequency inverters, vision inspection and illumination systems, hydraulic and power presses, CNC machines and machining centers, and CNC wire-cut EDM and EDM machines. In addition, the company provides printed circuit boards, CNC electrical discharged machines, CNC brass and molybdenum wire-cut machines, EDM, and drill EDM machines. Further, it offers various services comprising consultation and implementation of ERP and CRM systems, system integration, information technology training, maintenance of small computers, development of software and Websites, and information technology contract services. The company was founded in 1958 and is headquartered in Cheung Sha Wan, Hong Kong. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/16 12:40
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.