SEHK:1234

Stock Analysis Report

Executive Summary

China Lilang Limited, together with its subsidiaries, engages in the manufacture and wholesale of branded menswear and related accessories in the People’s Republic of China.

Rewards

Trading at 42.7% below its fair value

Earnings are forecast to grow 14.41% per year

Earnings grew by 17.3% over the past year

Risk Analysis

High level of non-cash earnings

Unstable dividend track record



Snowflake Analysis

Flawless balance sheet, undervalued and pays a dividend.


Similar Companies

H & M Hennes & Mauritz

OM:HM B

Share Price & News

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


Latest Share Price and Events

Stable Share Price: 1234 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-3.7%

1234

1.4%

HK Luxury

1.6%

HK Market


1 Year Return

2.8%

1234

27.3%

HK Luxury

6.0%

HK Market

Return vs Industry: 1234 underperformed the Hong Kong Luxury industry which returned 28% over the past year.

Return vs Market: 1234 underperformed the Hong Kong Market which returned 6.4% over the past year.


Shareholder returns

1234IndustryMarket
7 Day-3.7%1.4%1.6%
30 Day5.9%4.5%4.4%
90 Day6.5%6.2%8.6%
1 Year10.8%2.8%31.6%27.3%9.9%6.0%
3 Year72.2%40.9%52.9%34.9%27.7%14.7%
5 Year87.3%33.3%68.9%35.6%21.7%1.4%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

42.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 1234 (HK$6.61) is trading below our estimate of fair value (HK$11.54)

Significantly Below Fair Value: 1234 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 1234 is good value based on its PE Ratio (8.8x) compared to the Luxury industry average (9.1x).

PE vs Market: 1234 is good value based on its PE Ratio (8.8x) compared to the Hong Kong market (10.5x).


Price to Earnings Growth Ratio

PEG Ratio: 1234 is good value based on its PEG Ratio (0.6x)


Price to Book Ratio

PB vs Industry: 1234 is overvalued based on its PB Ratio (2x) compared to the HK Luxury industry average (0.9x).


Next Steps

Future Growth

How is China Lilang forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

14.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 1234's forecast earnings growth (14.4% per year) is above the savings rate (1.6%).

Earnings vs Market: 1234's earnings (14.4% per year) are forecast to grow faster than the Hong Kong market (11.3% per year).

High Growth Earnings: 1234's earnings are forecast to grow, but not significantly.

Revenue vs Market: 1234's revenue (14.7% per year) is forecast to grow faster than the Hong Kong market (10.2% per year).

High Growth Revenue: 1234's revenue (14.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 1234's Return on Equity is forecast to be high in 3 years time (24.8%)


Next Steps

Past Performance

How has China Lilang performed over the past 5 years?

6.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 1234 has a high level of non-cash earnings.

Growing Profit Margin: 1234's current net profit margins (23.4%) are lower than last year (25.1%).


Past Earnings Growth Analysis

Earnings Trend: 1234's earnings have grown by 6.7% per year over the past 5 years.

Accelerating Growth: 1234's earnings growth over the past year (17.3%) exceeds its 5-year average (6.7% per year).

Earnings vs Industry: 1234 earnings growth over the past year (17.3%) exceeded the Luxury industry -2.8%.


Return on Equity

High ROE: 1234's Return on Equity (23.1%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is China Lilang's financial position?


Financial Position Analysis

Short Term Liabilities: 1234's short term assets (CN¥3.5B) exceed its short term liabilities (CN¥1.0B).

Long Term Liabilities: 1234's short term assets (CN¥3.5B) exceed its long term liabilities (CN¥31.0M).


Debt to Equity History and Analysis

Debt Level: 1234's debt to equity ratio (6.9%) is considered satisfactory.

Reducing Debt: 1234's debt to equity ratio has reduced from 30.6% to 6.9% over the past 5 years.

Debt Coverage: 1234's debt is well covered by operating cash flow (177.2%).

Interest Coverage: 1234 earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: 1234 has a high level of physical assets or inventory.

Debt Coverage by Assets: 1234's debt is covered by short term assets (assets are 14.8x debt).


Next Steps

Dividend

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

8.53%

Current Dividend Yield


Dividend Yield vs Market

company8.5%marketbottom25%2.2%markettop25%6.0%industryaverage2.5%forecastin3Years10.1%

Current dividend yield vs market & industry

Notable Dividend: 1234's dividend (8.62%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.17%).

High Dividend: 1234's dividend (8.62%) is in the top 25% of dividend payers in the Hong Kong market (6.02%)


Stability and Growth of Payments

Stable Dividend: 1234's dividend payments have been volatile in the past 10 years.

Growing Dividend: 1234's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (52.2%), 1234's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 1234's dividends in 3 years are forecast to be covered by earnings (68.7% payout ratio).


Next Steps

Management

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

10.0yrs

Average management tenure


CEO

Liang Wang (57yo)

0yrs

Tenure

CN¥1,313,000

Compensation

Mr. Liang Xing Wang co-founded China Lilang Ltd. in April 1995 and serves as its Chief Executive Officer. Mr. Wang is responsible for China Lilang’s overall business development, strategic planning and cor ...


CEO Compensation Analysis

Compensation vs Market: Liang's total compensation ($USD190.57K) is below average for companies of similar size in the Hong Kong market ($USD470.54K).

Compensation vs Earnings: Liang's compensation has been consistent with company performance over the past year.


Management Age and Tenure

10.0yrs

Average Tenure

50yo

Average Age

Experienced Management: 1234's management team is seasoned and experienced (10 years average tenure).


Board Age and Tenure

11.6yrs

Average Tenure

54yo

Average Age

Experienced Board: 1234's board of directors are seasoned and experienced ( 11.6 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.


Ownership Breakdown

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


Management Team

  • Yuk Ko (57yo)

    CFO & Company Secretary

    • Tenure: 8.8yrs
  • Cheng Hu (74yo)

    Executive Director

    • Tenure: 11.6yrs
    • Compensation: CN¥585.00k
  • Dong Wang (59yo)

    Founder & Chairman

    • Compensation: CN¥1.05m
  • Cong Wang (50yo)

    Vice Chairman

    • Compensation: CN¥793.00k
  • Liang Wang (57yo)

    Vice Chairman & CEO

    • Compensation: CN¥1.31m
  • Rong Cai (50yo)

    Executive Director

    • Tenure: 11.6yrs
    • Compensation: CN¥598.00k
  • Rong Pan (46yo)

    Executive Director

    • Tenure: 11.6yrs
    • Compensation: CN¥1.05m
  • Mei Shi (42yo)

    Head of the Production Management Department

    • Tenure: 11.2yrs
  • Yu Zhang (49yo)

    Head of Group Strategy Development Department

    • Tenure: 4yrs
  • Wei Chen (49yo)

    Head of Group Ordering Department


    Board Members

    • Xing Nie (54yo)

      Independent Non-Executive Director

      • Tenure: 11.6yrs
      • Compensation: CN¥200.00k
    • Hong Te Lu (58yo)

      Independent Non-Executive Director

      • Tenure: 11.6yrs
      • Compensation: CN¥200.00k
    • Shixian Lai (45yo)

      Independent Non-Executive Director

      • Tenure: 7.1yrs
      • Compensation: CN¥200.00k
    • Cheng Hu (74yo)

      Executive Director

      • Tenure: 11.6yrs
      • Compensation: CN¥585.00k
    • Dong Wang (59yo)

      Founder & Chairman

      • Compensation: CN¥1.05m
    • Cong Wang (50yo)

      Vice Chairman

      • Compensation: CN¥793.00k
    • Liang Wang (57yo)

      Vice Chairman & CEO

      • Compensation: CN¥1.31m
    • Rong Cai (50yo)

      Executive Director

      • Tenure: 11.6yrs
      • Compensation: CN¥598.00k
    • Rong Pan (46yo)

      Executive Director

      • Tenure: 11.6yrs
      • Compensation: CN¥1.05m

    Company Information

    China Lilang Limited's company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: China Lilang Limited
    • Ticker: 1234
    • Exchange: SEHK
    • Founded: 1987
    • Industry: Apparel, Accessories and Luxury Goods
    • Sector: Consumer Durables
    • Market Cap: HK$7.999b
    • Shares outstanding: 1.20b
    • Website: https://www.lilanz.com

    Number of Employees


    Location

    • China Lilang Limited
    • Lilang Industrial Park
    • 200 Chang Xing Road
    • Jinjiang
    • Fujian Province
    • 362200
    • China

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    1234SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDSep 2009
    5LXDB (Deutsche Boerse AG)YesOrdinary SharesDEEURSep 2009
    1234SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesOrdinary SharesHKHKDSep 2009
    1234SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesOrdinary SharesHKHKDSep 2009

    Biography

    China Lilang Limited, together with its subsidiaries, engages in the manufacture and wholesale of branded menswear and related accessories in the People’s Republic of China. The company designs, sources, manufactures, and sells business and casual apparel for men under the LILANZ brand name across a distribution network covering 31 provinces, autonomous regions, and municipalities. It also provides management services. As of December 31, 2018, it had a total of 2,670 retail stores operated through distributors and sub-distributors. The company was founded in 1987 and is headquartered in Jinjiang, the People’s Republic of China. China Lilang Limited is a subsidiary of Xiao Sheng International Limited. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/19 12:51
    End of Day Share Price2020/01/17 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.