SEHK:2727

Stock Analysis Report

Shanghai Electric Group

Executive Summary

Shanghai Electric Group Company Limited, an equipment manufacturing conglomerate, provides clean energy equipment, new energy and environmental protection equipment, industrial equipment, and modern services in the People’s Republic of China.

Rewards

Trading at 87.7% below its fair value

Earnings are forecast to grow 6.02% per year

Earnings have grown 6.3% per year over the past 5 years

Risk Analysis

Unstable dividend track record

Large one-off items impacting financial results



Snowflake Analysis

Adequate balance sheet average dividend payer.


Similar Companies

Share Price & News

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


Latest Share Price and Events

Stable Share Price: 2727 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.7%

2727

-2.0%

HK Electrical

-1.8%

HK Market


1 Year Return

-11.9%

2727

-35.4%

HK Electrical

-2.8%

HK Market

Return vs Industry: 2727 exceeded the Hong Kong Electrical industry which returned -35.4% over the past year.

Return vs Market: 2727 underperformed the Hong Kong Market which returned -2.8% over the past year.


Shareholder returns

2727IndustryMarket
7 Day-1.7%-2.0%-1.8%
30 Day-3.3%-5.3%-4.6%
90 Day-7.8%-7.9%-1.0%
1 Year-9.7%-11.9%-34.4%-35.4%0.7%-2.8%
3 Year-29.2%-33.8%-46.7%-48.8%15.8%4.1%
5 Year-39.2%-43.7%-48.6%-51.6%16.6%-2.9%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Shanghai Electric 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: 2727 (HK$2.37) is trading below our estimate of fair value (HK$19.29)

Significantly Below Fair Value: 2727 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 2727 is poor value based on its PE Ratio (10.4x) compared to the Electrical industry average (9.1x).

PE vs Market: 2727 is poor value based on its PE Ratio (10.4x) compared to the Hong Kong market (10.1x).


Price to Earnings Growth Ratio

PEG Ratio: 2727 is poor value based on its PEG Ratio (1.7x)


Price to Book Ratio

PB vs Industry: 2727 is good value based on its PB Ratio (0.5x) compared to the HK Electrical industry average (0.6x).


Next Steps

Future Growth

How is Shanghai Electric Group forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

6.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 2727's forecast earnings growth (6% per year) is above the savings rate (1.6%).

Earnings vs Market: 2727's earnings (6% per year) are forecast to grow slower than the Hong Kong market (11.9% per year).

High Growth Earnings: 2727's earnings are forecast to grow, but not significantly.

Revenue vs Market: 2727's revenue (3.6% per year) is forecast to grow slower than the Hong Kong market (9.7% per year).

High Growth Revenue: 2727's revenue (3.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 2727's Return on Equity is forecast to be low in 3 years time (5.1%).


Next Steps

Past Performance

How has Shanghai Electric Group performed over the past 5 years?

6.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 2727 has a large one-off gain of CN¥1.6B impacting its September 30 2019 financial results.

Growing Profit Margin: 2727's current net profit margins (2.9%) are lower than last year (3.3%).


Past Earnings Growth Analysis

Earnings Trend: 2727's earnings have grown by 6.3% per year over the past 5 years.

Accelerating Growth: 2727's earnings growth over the past year (3.7%) is below its 5-year average (6.3% per year).

Earnings vs Industry: 2727 earnings growth over the past year (3.7%) underperformed the Electrical industry 4.8%.


Return on Equity

High ROE: 2727's Return on Equity (5.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Shanghai Electric Group's financial position?


Financial Position Analysis

Short Term Liabilities: 2727's short term assets (CN¥187.4B) exceed its short term liabilities (CN¥150.0B).

Long Term Liabilities: 2727's short term assets (CN¥187.4B) exceed its long term liabilities (CN¥25.1B).


Debt to Equity History and Analysis

Debt Level: 2727's debt to equity ratio (39%) is considered satisfactory.

Reducing Debt: 2727's debt to equity ratio has increased from 11.3% to 39% over the past 5 years.

Debt Coverage: 2727's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: 2727's interest payments on its debt are well covered by EBIT (7.6x coverage).


Balance Sheet

Inventory Level: 2727 has a high level of physical assets or inventory.

Debt Coverage by Assets: 2727's debt is covered by short term assets (assets are 5.4x debt).


Next Steps

Dividend

What is Shanghai Electric Group's current dividend yield, its reliability and sustainability?

2.88%

Current Dividend Yield


Dividend Yield vs Market

company2.9%marketbottom25%2.2%markettop25%6.3%industryaverage2.6%forecastin3Years3.0%

Current dividend yield vs market & industry

Notable Dividend: 2727's dividend (2.88%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.25%).

High Dividend: 2727's dividend (2.88%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.34%).


Stability and Growth of Payments

Stable Dividend: 2727's dividend payments have been volatile in the past 10 years.

Growing Dividend: 2727's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (30%), 2727's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 2727's dividends in 3 years are forecast to be well covered by earnings (34.1% payout ratio).


Next Steps

Management

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

2.3yrs

Average management tenure


CEO

Jianhua Zheng (59yo)

2.3yrs

Tenure

CN¥1,241,000

Compensation

Mr. Jianhua Zheng has been Chairman and Chief Executive Officer of Shanghai Electric Group Company Limited since September 1, 2017. Mr. Zheng served as the President of Shanghai Electric Group Company Limi ...


CEO Compensation Analysis

Compensation vs Market: Jianhua's total compensation ($USD176.03K) is below average for companies of similar size in the Hong Kong market ($USD511.20K).

Compensation vs Earnings: Jianhua's compensation has increased by more than 20% in the past year.


Management Age and Tenure

2.3yrs

Average Tenure

56yo

Average Age

Experienced Management: 2727's management team is considered experienced (2.3 years average tenure).


Board Age and Tenure

1.3yrs

Average Tenure

58yo

Average Age

Experienced Board: 2727's board of directors are not considered experienced ( 1.3 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.


Recent Insider Transactions

SellCN¥13,162,48030 Aug 19
BlackRock, Inc.
EntityCompany
Shares5,400,000
Max PriceCN¥2.44
BuyCN¥185,56808 Jan 19
BlackRock, Inc.
EntityCompany
Shares74,853
Max PriceCN¥2.48

Ownership Breakdown

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


Management Team

  • Kang Hu (56yo)

    CFO & Finance Director

    • Tenure: 0yrs
  • Rong Fu (36yo)

    Director of Secretariat Office & Secretary to the Board

    • Tenure: 14.9yrs
  • Andrew Li (59yo)

    Head of the Investor Relations Department & Company Secretary

    • Tenure: 0yrs
  • Bin Zhu (58yo)

    Executive Director

    • Tenure: 1.3yrs
    • Compensation: CN¥1.63m
  • Ou Huang (48yo)

    President & Executive Director

    • Tenure: 1.3yrs
    • Compensation: CN¥1.01m
  • Liping Tong (47yo)

    Chief Legal Officer & Head of the Legal Affair Department

    • Tenure: 8.5yrs
  • Jianhua Zheng (59yo)

    Chairman & CEO

    • Tenure: 2.3yrs
    • Compensation: CN¥1.24m
  • Mingjie Zhang (56yo)

    Chief Investment Officer

    • Tenure: 1.3yrs
  • Zhaokai Zhu (50yo)

    Executive Director

    • Tenure: 1.3yrs
    • Compensation: CN¥660.81k

Board Members

  • Minfang Yao (51yo)

    Non-Executive Director

    • Tenure: 12.1yrs
  • Bin Zhu (58yo)

    Executive Director

    • Tenure: 1.3yrs
    • Compensation: CN¥1.63m
  • Ou Huang (48yo)

    President & Executive Director

    • Tenure: 1.3yrs
    • Compensation: CN¥1.01m
  • Jianhua Zheng (59yo)

    Chairman & CEO

    • Tenure: 2.3yrs
    • Compensation: CN¥1.24m
  • Junhao Chu (74yo)

    Independent Non-Executive Director

    • Tenure: 5.4yrs
    • Compensation: CN¥250.00k
  • An Li (58yo)

    Non-Executive Director

    • Tenure: 1.3yrs
  • Guoxiong Zhou (62yo)

    Chairman of Supervisory Committee

    • Tenure: 0yrs
  • Zhaokai Zhu (50yo)

    Executive Director

    • Tenure: 1.3yrs
    • Compensation: CN¥660.81k
  • Juntong Xi (66yo)

    Independent Non-Executive Director

    • Tenure: 1.3yrs
    • Compensation: CN¥83.00k
  • Xingsheng Hua (58yo)

    Vice Chairman of Supervisory Committee

    • Tenure: 0yrs

Company Information

Shanghai Electric Group Company Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Shanghai Electric Group Company Limited
  • Ticker: 2727
  • Exchange: SEHK
  • Founded: 2004
  • Industry: Heavy Electrical Equipment
  • Sector: Capital Goods
  • Market Cap: HK$70.615b
  • Shares outstanding: 15.15b
  • Website: https://www.shanghai-electric.com

Number of Employees


Location

  • Shanghai Electric Group Company Limited
  • No. 212, Qinjiang Road
  • Shanghai
  • 200233
  • China

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
2727SEHK (The Stock Exchange of Hong Kong Ltd.)YesForeign Shares-Foreign ListedHKHKDApr 2005
SIEL.FOTCPK (Pink Sheets LLC)YesForeign Shares-Foreign ListedUSUSDApr 2005
USRDB (Deutsche Boerse AG)YesForeign Shares-Foreign ListedDEEURApr 2005
2727SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDApr 2005
2727SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesForeign Shares-Foreign ListedHKHKDApr 2005
601727SHSE (Shanghai Stock Exchange)Domestic SharesCNCNYDec 2008
601727XSSC (Shanghai Stock Exchange - Shanghai - Hong Kong Stock Connect)Domestic SharesCNCNYDec 2008
SIEL.YOTCPK (Pink Sheets LLC)UNSPONSORED ADRUSUSDJan 2009

Biography

Shanghai Electric Group Company Limited, an equipment manufacturing conglomerate, provides clean energy equipment, new energy and environmental protection equipment, industrial equipment, and modern servic ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/05 12:45
End of Day Share Price2019/12/05 00:00
Earnings2019/09/30
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.