SEHK:1836

Stock Analysis Report

Stella International Holdings

Executive Summary

Stella International Holdings Limited designs, develops, manufactures, sells, and retails footwear products and leather goods for men and women.

Rewards

Trading at 43.3% below its fair value

Earnings are forecast to grow 21.77% per year

Earnings grew by 44.4% over the past year

Risk Analysis

Dividend of 6.86% is not well covered by earnings



Snowflake Analysis

Excellent balance sheet with proven track record and pays a dividend.


Similar Companies

Share Price & News

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


Latest Share Price and Events

Stable Share Price: 1836 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

2.7%

1836

1.2%

HK Luxury

-0.2%

HK Market


1 Year Return

20.7%

1836

25.2%

HK Luxury

4.5%

HK Market

Return vs Industry: 1836 underperformed the Hong Kong Luxury industry which returned 28% over the past year.

Return vs Market: 1836 exceeded the Hong Kong Market which returned 6.4% over the past year.


Shareholder returns

1836IndustryMarket
7 Day2.7%1.2%-0.2%
30 Day1.3%3.8%3.6%
90 Day0.3%6.0%7.8%
1 Year29.0%20.7%29.5%25.2%8.4%4.5%
3 Year27.2%5.5%53.3%35.2%26.8%13.9%
5 Year-17.1%-37.5%68.5%35.3%21.0%0.9%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Stella International Holdings undervalued compared to its fair value and its price relative to the market?

39.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 1836 (HK$12.28) is trading below our estimate of fair value (HK$21.65)

Significantly Below Fair Value: 1836 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 1836 is poor value based on its PE Ratio (15.4x) compared to the Luxury industry average (9.1x).

PE vs Market: 1836 is poor value based on its PE Ratio (15.4x) compared to the Hong Kong market (10.5x).


Price to Earnings Growth Ratio

PEG Ratio: 1836 is good value based on its PEG Ratio (0.7x)


Price to Book Ratio

PB vs Industry: 1836 is overvalued based on its PB Ratio (1.3x) compared to the HK Luxury industry average (0.9x).


Next Steps

Future Growth

How is Stella International Holdings forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

20.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 1836's forecast earnings growth (21.8% per year) is above the savings rate (1.6%).

Earnings vs Market: 1836's earnings (21.8% per year) are forecast to grow faster than the Hong Kong market (11.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: 1836's revenue (3% per year) is forecast to grow slower than the Hong Kong market (10.2% per year).

High Growth Revenue: 1836's revenue (3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 1836's Return on Equity is forecast to be low in 3 years time (12.8%).


Next Steps

Past Performance

How has Stella International Holdings performed over the past 5 years?

-16.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 1836 has high quality earnings.

Growing Profit Margin: 1836's current net profit margins (5.1%) are higher than last year (3.6%).


Past Earnings Growth Analysis

Earnings Trend: 1836's earnings have declined by -16.2% per year over the past 5 years.

Accelerating Growth: 1836's earnings growth over the past year (44.4%) exceeds its 5-year average (-16.2% per year).

Earnings vs Industry: 1836 earnings growth over the past year (44.4%) exceeded the Luxury industry -2.8%.


Return on Equity

High ROE: 1836's Return on Equity (8.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Stella International Holdings's financial position?


Financial Position Analysis

Short Term Liabilities: 1836's short term assets ($778.0M) exceed its short term liabilities ($305.0M).

Long Term Liabilities: 1836's short term assets ($778.0M) exceed its long term liabilities ($6.9M).


Debt to Equity History and Analysis

Debt Level: 1836's debt to equity ratio (14.6%) is considered satisfactory.

Reducing Debt: 1836's debt to equity ratio has increased from 11.6% to 14.6% over the past 5 years.

Debt Coverage: 1836's debt is well covered by operating cash flow (113.4%).

Interest Coverage: 1836's interest payments on its debt are well covered by EBIT (43.1x coverage).


Balance Sheet

Inventory Level: 1836 has a high level of physical assets or inventory.

Debt Coverage by Assets: 1836's debt is covered by short term assets (assets are 5.7x debt).


Next Steps

Dividend

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

6.62%

Current Dividend Yield


Dividend Yield vs Market

company6.6%marketbottom25%2.2%markettop25%6.1%industryaverage2.5%forecastin3Years7.8%

Current dividend yield vs market & industry

Notable Dividend: 1836's dividend (6.86%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.17%).

High Dividend: 1836's dividend (6.86%) is in the top 25% of dividend payers in the Hong Kong market (6.02%)


Stability and Growth of Payments

Stable Dividend: 1836's dividend payments have been volatile in the past 10 years.

Growing Dividend: 1836's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (105.8%), 1836's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 1836's dividends in 3 years are forecast to be covered by earnings (78.5% payout ratio).


Next Steps

Management

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

8.3yrs

Average board tenure


CEO

Stephen Chi (47yo)

1yrs

Tenure

US$748,000

Compensation

Mr. Lo-Jen Chi, also known as Stephen, has been Chief Executive Officer at Stella International Holdings Ltd. since January 1, 2019 and served as the Chief Executive Officer of The Women's Footwear Busines ...


CEO Compensation Analysis

Compensation vs Market: Stephen's total compensation ($USD748.00K) is above average for companies of similar size in the Hong Kong market ($USD547.75K).

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


Board Age and Tenure

8.3yrs

Average Tenure

66yo

Average Age

Experienced Board: 1836's board of directors are considered experienced (8.3 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

SellHK$9,463,72829 Apr 19
Marathon Asset Management, LLP
EntityCompany
Shares694,000
Max PriceHK$13.64

Ownership Breakdown

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


Management Team

  • Katie Kan (48yo)

    Company Secretary

    • Don Lee (61yo)

      Chief Financial Officer

      • Stephen Chi (47yo)

        CEO & Executive Director

        • Tenure: 1yrs
        • Compensation: US$748.00k
      • Dermot Smowton (64yo)

        Chief Operating Officer

        • Tenure: 4.1yrs

      Board Members

      • Johnny Chen (60yo)

        Independent Non Executive Director

        • Tenure: 10.9yrs
        • Compensation: US$61.00k
      • Stephen Chi (47yo)

        CEO & Executive Director

        • Tenure: 1yrs
        • Compensation: US$748.00k
      • Jack Chiang (68yo)

        Non-Executive Director

        • Tenure: 12.6yrs
        • Compensation: US$616.00k
      • Lawrence Chen (58yo)

        Chairman of the Board

        • Tenure: 0.8yrs
        • Compensation: US$500.00k
      • Eric Chao (67yo)

        Non-Executive Director

        • Tenure: 12.6yrs
        • Compensation: US$505.00k
      • Peter Bolliger (74yo)

        Independent Non-Executive Director

        • Tenure: 9.3yrs
        • Compensation: US$54.00k
      • Jie Lian (44yo)

        Independent Non-Executive Director

        • Tenure: 2.9yrs
        • Compensation: US$52.00k
      • Thomas Yue (65yo)

        Independent Non-Executive Director

        • Tenure: 7yrs
        • Compensation: US$68.00k
      • William Chan (70yo)

        Independent Non-Executive Director

        • Tenure: 7.3yrs
        • Compensation: US$67.00k
      • Nan Sun Shi (67yo)

        Independent Non-Executive Director

        • Tenure: 1yrs

      Company Information

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


      Key Information

      • Name: Stella International Holdings Limited
      • Ticker: 1836
      • Exchange: SEHK
      • Founded: 1982
      • Industry: Footwear
      • Sector: Consumer Durables
      • Market Cap: HK$10.071b
      • Shares outstanding: 793.00m
      • Website: https://www.stella.com.hk

      Number of Employees


      Location

      • Stella International Holdings Limited
      • MG Tower
      • Flat C
      • Kowloon
      • Kowloon
      • Hong Kong

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      1836SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDJul 2007
      31SDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJul 2007
      SLNL.YOTCPK (Pink Sheets LLC)UNSPONSORD ADRUSUSDOct 2008

      Biography

      Stella International Holdings Limited designs, develops, manufactures, sells, and retails footwear products and leather goods for men and women. The company operates through Men’s Footwear, Women’s Footwear, and Footwear Retailing and Wholesaling segments. It is involved in holding of intellectual property rights; and provision of secretary and accounting services. The company operates its stores under the Stella Luna, What For, and JKJY by Stella names. It operates in the United States, the People’s Republic of China, the United Kingdom, the Netherlands, Canada, Japan, Germany, Belgium, and internationally. The company was founded in 1982 and is based in Kowloon, Hong Kong. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/21 12:49
      End of Day Share Price2020/01/21 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.