SEHK:8040

Stock Analysis Report

Executive Summary

DCB Holdings Limited, an investment holding company, provides fitting-out and renovation services in Hong Kong.

Rewards

Trading at 89.5% below its fair value

Risk Analysis

Earnings have declined by -2.85% per year over past 5 years

Does not have a meaningful market cap (HK$61M)

Unstable dividend track record

Highly volatile share price over past 3 months

+ 2 more risks


Snowflake Analysis

Undervalued with excellent balance sheet.

Share Price & News

How has DCB Holdings's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 8040's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

0%

8040

0.4%

HK Construction

1.5%

HK Market


1 Year Return

-41.9%

8040

-15.9%

HK Construction

5.9%

HK Market

Return vs Industry: 8040 underperformed the Hong Kong Construction industry which returned -16.2% over the past year.

Return vs Market: 8040 underperformed the Hong Kong Market which returned 6.4% over the past year.


Shareholder returns

8040IndustryMarket
7 Day0%0.4%1.5%
30 Day-18.2%-0.04%4.2%
90 Day-26.5%2.3%8.7%
1 Year-39.2%-41.9%-11.8%-15.9%9.8%5.9%
3 Yearn/a-26.9%-34.9%27.7%14.7%
5 Yearn/a-20.4%-32.2%21.4%1.2%

Price Volatility Vs. Market

How volatile is DCB Holdings's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is DCB Holdings 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: 8040 (HK$0.19) is trading below our estimate of fair value (HK$1.82)

Significantly Below Fair Value: 8040 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 8040 is good value based on its PE Ratio (8.6x) compared to the Construction industry average (9.9x).

PE vs Market: 8040 is good value based on its PE Ratio (8.6x) compared to the Hong Kong market (10.5x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate 8040's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: 8040 is good value based on its PB Ratio (0.6x) compared to the HK Construction industry average (1x).


Next Steps

Future Growth

How is DCB Holdings forecast to perform in the next 1 to 3 years based on estimates from 0 analysts?

12.1%

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 DCB Holdings 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 DCB Holdings performed over the past 5 years?

-2.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 8040 has high quality earnings.

Growing Profit Margin: 8040's current net profit margins (2.2%) are lower than last year (5.3%).


Past Earnings Growth Analysis

Earnings Trend: 8040's earnings have declined by -2.8% per year over the past 5 years.

Accelerating Growth: 8040's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 8040 had negative earnings growth (-53.5%) over the past year, making it difficult to compare to the Construction industry average (-12.3%).


Return on Equity

High ROE: 8040's Return on Equity (7.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is DCB Holdings's financial position?


Financial Position Analysis

Short Term Liabilities: 8040's short term assets (HK$154.6M) exceed its short term liabilities (HK$61.2M).

Long Term Liabilities: 8040's short term assets (HK$154.6M) exceed its long term liabilities (HK$1.1M).


Debt to Equity History and Analysis

Debt Level: 8040's debt to equity ratio (11.5%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if 8040's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: 8040's debt is well covered by operating cash flow (129.3%).

Interest Coverage: 8040's interest payments on its debt are well covered by EBIT (39x coverage).


Balance Sheet

Inventory Level: 8040 has a low level of unsold assets or inventory.

Debt Coverage by Assets: 8040's debt is covered by short term assets (assets are 14.1x debt).


Next Steps

Dividend

What is DCB Holdings's current dividend yield, its reliability and sustainability?

6.67%

Current Dividend Yield


Dividend Yield vs Market

company6.7%marketbottom25%2.2%markettop25%6.0%industryaverage4.3%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: 8040's dividend (6.32%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.17%).

High Dividend: 8040's dividend (6.32%) is in 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, 8040 has been paying a dividend for less than 10 years.

Growing Dividend: 8040 has only been paying a dividend for 2 years, and since then payments have not increased.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (54.4%), 8040'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

What is the CEO of DCB Holdings's salary, the management and board of directors tenure and is there insider trading?

2.7yrs

Average management tenure


CEO

Dennis Cheng (60yo)

2.7yrs

Tenure

HK$2,127,000

Compensation

Mr. Tsang-Fu Cheng also known as Dennis has been Chief Executive Officer and Executive Director of DCB Holdings Ltd since May 29, 2017. Mr. Dennis Cheng is primarily responsible for the day-to-day manageme ...


CEO Compensation Analysis

Compensation vs Market: Dennis's total compensation ($USD0.00) is below average for companies of similar size in the Hong Kong market ($USD228.16K).

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


Management Age and Tenure

2.7yrs

Average Tenure

60yo

Average Age

Experienced Management: 8040's management team is considered experienced (2.7 years average tenure).


Board Age and Tenure

2.3yrs

Average Tenure

55.5yo

Average Age

Experienced Board: 8040's board of directors are not considered experienced ( 2.3 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.


Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 10.3%.


Management Team

  • Dick Cheng (63yo)

    Chairman of the Board

    • Tenure: 2.7yrs
    • Compensation: HK$435.00k
  • Dennis Cheng (60yo)

    CEO & Executive Director

    • Tenure: 2.7yrs
    • Compensation: HK$2.13m
  • Lily Liu (58yo)

    Compliance Officer & Executive Director

    • Tenure: 2.8yrs
    • Compensation: HK$1.17m
  • Richard Cheng (72yo)

    Financial Controller

    • Jefferson Au (38yo)

      Company Secretary & Assistant Financial Controller

      • Tenure: 2.7yrs

    Board Members

    • Kwok Keung Cheung (52yo)

      Independent Non Executive Director

      • Tenure: 2yrs
      • Compensation: HK$9.00k
    • Chi Man Chak (53yo)

      Independent Non-Executive Director

      • Tenure: 2yrs
      • Compensation: HK$9.00k
    • Dick Cheng (63yo)

      Chairman of the Board

      • Tenure: 2.7yrs
      • Compensation: HK$435.00k
    • Fangus Chu (51yo)

      Independent Non Executive Director

      • Tenure: 2yrs
      • Compensation: HK$9.00k
    • Dennis Cheng (60yo)

      CEO & Executive Director

      • Tenure: 2.7yrs
      • Compensation: HK$2.13m
    • Lily Liu (58yo)

      Compliance Officer & Executive Director

      • Tenure: 2.8yrs
      • Compensation: HK$1.17m

    Company Information

    DCB Holdings Limited's company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: DCB Holdings Limited
    • Ticker: 8040
    • Exchange: SEHK
    • Founded: 2008
    • Industry: Construction and Engineering
    • Sector: Capital Goods
    • Market Cap: HK$57.600m
    • Shares outstanding: 320.00m
    • Website: https://www.dcb.com.hk

    Number of Employees


    Location

    • DCB Holdings Limited
    • Lucky Factory Building
    • Room D, 12th Floor
    • Kwun Tong
    • Kowloon
    • Hong Kong

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    8040SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDFeb 2018

    Biography

    DCB Holdings Limited, an investment holding company, provides fitting-out and renovation services in Hong Kong. It operates through Fitting-Out Work and Renovation Work segments. The company offers interior fitting-out services for new buildings; and renovation services, such as upgrade, makeover, and demolition of premises in the private sector, including residential apartments and residential dwellings, show flats, clubhouses, sale offices, public areas in residential and commercial buildings, offices, shopping malls, and shops. It serves property developers, main contractors or direct contractors, and owners or tenants of properties. The company was founded in 2008 and is headquartered in Kwun Tong, Hong Kong. DCB Holdings Limited is a subsidiary of Advance Goal Group Limited. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/18 12:59
    End of Day Share Price2020/01/17 00:00
    Earnings2019/09/30
    Annual Earnings2019/03/31


    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.