SEHK:1829

Stock Analysis Report

China Machinery Engineering

Executive Summary

China Machinery Engineering Corporation, together with its subsidiaries, operates as an engineering contracting and services provider in Asia, South America, North America, Africa, and Europe.

Snowflake

Fundamentals

Very undervalued with adequate balance sheet and pays a dividend.

Share Price & News

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


Latest Share Price and Events


Market Performance


7 Day Return

-1.2%

1829

0.9%

HK Construction

3.1%

HK Market


1 Year Return

-6.1%

1829

-19.1%

HK Construction

0.5%

HK Market

Return vs Industry: 1829 exceeded the Hong Kong Construction industry which returned -19.1% over the past year.

Return vs Market: 1829 underperformed the Hong Kong Market which returned 0.5% over the past year.


Shareholder returns

1829IndustryMarket
7 Day-1.2%0.9%3.1%
30 Day-1.8%-5.8%-1.8%
90 Day-7.0%-11.7%-4.8%
1 Year0.2%-6.1%-15.8%-19.1%4.1%0.5%
3 Year-20.5%-32.8%-26.1%-33.9%15.8%4.2%
5 Year0.03%-21.9%-0.9%-15.7%18.9%-0.9%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is China Machinery Engineering undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Undervalued: 1829 (HK$3.21) is trading below our estimate of fair value (HK$16.77)

Significantly Undervalued: 1829 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 1829 is good value based on its PE Ratio (5.4x) compared to the Construction industry average (9.9x).

PE vs Market: 1829 is good value based on its PE Ratio (5.4x) compared to the Hong Kong market (10.3x).


Price to Earnings Growth Ratio

Low PEG Ratio: 1829 is good value based on its PEG Ratio (0.7x)


Price to Book Ratio

PB vs Industry: 1829 is good value based on its PB Ratio (0.7x) compared to the HK Construction industry average (1.1x).


Next Steps

Future Growth

How is China Machinery Engineering forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

7.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 1829's forecast earnings growth (7.4% per year) is above the savings rate (2%).

Earnings vs Market: 1829's earnings (7.4% per year) are forecast to grow slower than the Hong Kong market (11.3% per year).

High Growth Earnings: 1829's earnings are forecast to grow, but not significantly.

Revenue vs Market: 1829's revenue (9.5% per year) is forecast to grow slower than the Hong Kong market (10% per year).

High Growth Revenue: 1829's revenue (9.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: 1829's Return on Equity is forecast to be low in 3 years time (13.6%).


Next Steps

Past Performance

How has China Machinery Engineering performed over the past 5 years?

-0.1%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: 1829's earnings have declined by -0.1% per year over the past 5 years.

Accelerating Growth: 1829's earnings growth over the past year (10%) exceeds its 5-year average (-0.1% per year).

Earnings vs Industry: 1829 earnings growth over the past year (10%) exceeded the Construction industry -12.4%.


Return on Equity

High ROE: 1829's Return on Equity (13.4%) is considered low.


Return on Assets

ROA vs Industry: 1829's Return on Assets is below or equal to the Construction industry average last year.


Return on Capital Employed

ROCE Improving: 1829's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is China Machinery Engineering's financial position?


Financial Position Analysis

Short Term Liabilities: 1829's short term assets (CN¥40.5B) exceeds its short term liabilities (CN¥36.4B)

Long Term Liabilities: 1829's short term assets (40.5B) exceeds its long term liabilities (1.6B)


Debt to Equity History and Analysis

Debt Level: 1829's debt to equity ratio (3.9%) is considered satisfactory

Reducing Debt: 1829's debt to equity ratio has increased from 2.5% to 3.9% over the past 5 years.

Debt Coverage: 1829's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: 1829 earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: 1829 has a low level of unsold assets or inventory.

Debt Coverage by Assets: 1829's debt is covered by short term assets (assets are 63.089550x debt).


Next Steps

Dividend

What is China Machinery Engineering's current dividend yield, its reliability and sustainability?

7.12%

Current Dividend Yield


Dividend Yield vs Market

company7.1%marketbottom25%2.3%markettop25%6.3%industryaverage4.6%forecastin3Years8.4%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: 1829's dividend (7.12%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.27%).

High Dividend: 1829's dividend (7.12%) is in the top 25% of dividend payers in the Hong Kong market (6.25%)

Stable Dividend: Whilst dividend payments have been stable, 1829 has been paying a dividend for less than 10 years.

Growing Dividend: 1829's dividend payments have increased, but the company has only paid a dividend for 6 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (38.4%), 1829's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 1829's dividends in 3 years are forecast to be well covered by earnings (42.3% payout ratio).


Next Steps

Management

What is the CEO of China Machinery Engineering's salary, the management and board of directors tenure and is there insider trading?

2.7yrs

Average management tenure


CEO

Xiaojun Han (50yo)

0.8yrs

Tenure

CN¥1,752,000

Compensation

Mr. Han Xiaojun has been President of China Machinery Engineering Corporation since December 21, 2018. Mr. Han was Vice Chairman of China Machinery Engineering Corporation since March 5, 2018 until Decembe ...


CEO Compensation Analysis

Compensation vs. Market: Xiaojun has recently become CEO, making it difficult to compare their total compensation against companies of similar size in the Hong Kong market.

Compensation vs Earnings: Insufficient data to compare Xiaojun's compensation with company performance.


Management Age and Tenure

2.7yrs

Average Tenure

50.5yo

Average Age

Experienced Management: 1829's management team is considered experienced (2.7 years average tenure).


Board Age and Tenure

5.7yrs

Average Tenure

55yo

Average Age

Experienced Board: 1829's board of directors are considered experienced (5.7 years average tenure).


Insider Trading

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


Recent Insider Transactions

BuyCN¥3,027,56101 May 19
Cape Ann Asset Management Ltd
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Shares797,000
Max PriceCN¥3.80
BuyCN¥2,859,33019 Feb 19
Value Partners Hong Kong Limited
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Shares708,000
Max PriceCN¥4.04
BuyCN¥15,979,64213 Feb 19
Cape Ann Asset Management Ltd
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Shares3,978,000
Max PriceCN¥4.02
BuyCN¥4,322,24430 Jan 19
Value Partners Hong Kong Limited
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Shares1,089,000
Max PriceCN¥3.97
BuyCN¥19,782,06324 Jan 19
Value Partners Limited
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Shares5,139,000
Max PriceCN¥3.85
SellCN¥18,980,51624 Jan 19
Grantham Mayo Van Otterloo & Co. LLC
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Shares4,930,000
Max PriceCN¥3.85
SellCN¥1,868,09024 Oct 18
Value Partners Limited
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Shares553,000
Max PriceCN¥3.38

Ownership Breakdown


Management Team

  • Seaman Kwok (60yo)

    Joint Company Secretary

    • Tenure: 1.7yrs
  • Jianguo Zhang (58yo)

    Vice President

    • Tenure: 13.4yrs
  • Chun Zhang (51yo)

    Executive Chairman

    • Tenure: 1.8yrs
    • Compensation: CN¥1.75m
  • Wei Ai (49yo)

    Vice President

    • Tenure: 4.9yrs
  • Wei Zhang (56yo)

    Vice President

    • Tenure: 4.1yrs
  • Yanshui Fang (48yo)

    Vice President

    • Tenure: 2.7yrs
  • Zigang Tong (48yo)

    Vice President

    • Tenure: 2.7yrs
  • Yili Wang (53yo)

    CFO & Joint Company Secretary

    • Tenure: 1.7yrs
  • Ting Liu (37yo)

    Deputy GM of the Audit Department & Supervisor

    • Tenure: 1.8yrs
  • Xiaojun Han (50yo)

    President & Executive Director

    • Tenure: 0.8yrs
    • Compensation: CN¥1.75m

Board Members

  • Hongyu Liu (56yo)

    Independent Non-Executive Director

    • Tenure: 8.8yrs
    • Compensation: CN¥229.00k
  • Chun Zhang (51yo)

    Executive Chairman

    • Tenure: 1.8yrs
    • Compensation: CN¥1.75m
  • Yongzhong Fang (68yo)

    Independent Non-Executive Director

    • Tenure: 8.3yrs
    • Compensation: CN¥229.00k
  • Huaqiang Quan (49yo)

    Chairman of Supervisory Board

    • Tenure: 0yrs
  • Bernard Wu (54yo)

    Independent Non Executive Director

    • Tenure: 5.7yrs
    • Compensation: CN¥229.00k
  • Li Liu (64yo)

    Independent Non-Executive Director

    • Tenure: 8.8yrs
    • Compensation: CN¥229.00k
  • Fusheng Zhang (66yo)

    Non Executive Director

    • Tenure: 5.7yrs
    • Compensation: CN¥118.00k
  • Benli Yu (65yo)

    Non Executive Director

    • Tenure: 5.7yrs
    • Compensation: CN¥117.00k
  • Ting Liu (37yo)

    Deputy GM of the Audit Department & Supervisor

    • Tenure: 1.8yrs
  • Xiaojun Han (50yo)

    President & Executive Director

    • Tenure: 0.8yrs
    • Compensation: CN¥1.75m

Company Information

China Machinery Engineering Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: China Machinery Engineering Corporation
  • Ticker: 1829
  • Exchange: SEHK
  • Founded: 1978
  • Industry: Construction and Engineering
  • Sector: Capital Goods
  • Market Cap: HK$13.285b
  • Shares outstanding: 4.13b
  • Website: https://www.cmec.com

Number of Employees


Location

  • China Machinery Engineering Corporation
  • No. 178 Guang’anmenwai Street
  • Xicheng District
  • Beijing
  • 100055
  • China

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
1829SEHK (The Stock Exchange of Hong Kong Ltd.)YesForeign Shares-Foreign ListedHKHKDDec 2012
C3MDB (Deutsche Boerse AG)YesForeign Shares-Foreign ListedDEEURDec 2012
CMEG.FOTCPK (Pink Sheets LLC)YesForeign Shares-Foreign ListedUSUSDDec 2012
CMYY.YOTCPK (Pink Sheets LLC)UNSPONSORD ADRUSUSDApr 2018

Biography

China Machinery Engineering Corporation, together with its subsidiaries, operates as an engineering contracting and services provider in Asia, South America, North America, Africa, and Europe. It operates  ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/17 12:54
End of Day Share Price2019/10/17 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.