SEHK:2678

Stock Analysis Report

Executive Summary

Texhong Textile Group Limited, an investment holding company, primarily manufactures and sells yarns, grey fabrics, and garment fabrics.

Rewards

Trading at 85.3% below its fair value

Earnings are forecast to grow 25.28% per year

Risk Analysis

Has a high level of debt

Unstable dividend track record



Snowflake Analysis

Undervalued with reasonable growth potential and pays a dividend.

Share Price & News

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


Latest Share Price and Events

Stable Share Price: 2678 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.8%

2678

1.6%

HK Luxury

0.9%

HK Market


1 Year Return

-13.0%

2678

21.8%

HK Luxury

-1.5%

HK Market

Return vs Industry: 2678 underperformed the Hong Kong Luxury industry which returned 21.8% over the past year.

Return vs Market: 2678 underperformed the Hong Kong Market which returned -1.5% over the past year.


Shareholder returns

2678IndustryMarket
7 Day-1.8%1.6%0.9%
30 Day-1.6%-2.2%-3.7%
90 Day13.1%6.9%-0.1%
1 Year-9.2%-13.0%26.1%21.8%2.0%-1.5%
3 Year-9.9%-21.3%49.6%31.1%17.3%5.4%
5 Year81.4%49.5%54.0%23.7%17.1%-2.2%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Texhong Textile 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: 2678 (HK$8.09) is trading below our estimate of fair value (HK$55.06)

Significantly Below Fair Value: 2678 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 2678 is good value based on its PE Ratio (6.5x) compared to the Luxury industry average (9x).

PE vs Market: 2678 is good value based on its PE Ratio (6.5x) compared to the Hong Kong market (10.1x).


Price to Earnings Growth Ratio

PEG Ratio: 2678 is good value based on its PEG Ratio (0.3x)


Price to Book Ratio

PB vs Industry: 2678 is overvalued based on its PB Ratio (0.9x) compared to the HK Luxury industry average (0.9x).


Next Steps

Future Growth

How is Texhong Textile Group forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

25.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 2678's forecast earnings growth (25.3% per year) is above the savings rate (1.6%).

Earnings vs Market: 2678's earnings (25.3% per year) are forecast to grow faster than the Hong Kong market (11.9% per year).

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

Revenue vs Market: 2678's revenue (9.8% per year) is forecast to grow faster than the Hong Kong market (9.7% per year).

High Growth Revenue: 2678's revenue (9.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 2678's Return on Equity is forecast to be low in 3 years time (19.4%).


Next Steps

Past Performance

How has Texhong Textile Group performed over the past 5 years?

18.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 2678 has high quality earnings.

Growing Profit Margin: 2678's current net profit margins (5%) are lower than last year (6.3%).


Past Earnings Growth Analysis

Earnings Trend: 2678's earnings have grown by 18.2% per year over the past 5 years.

Accelerating Growth: 2678's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 2678 had negative earnings growth (-7%) over the past year, making it difficult to compare to the Luxury industry average (-2.8%).


Return on Equity

High ROE: 2678's Return on Equity (13.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Texhong Textile Group's financial position?


Financial Position Analysis

Short Term Liabilities: 2678's short term assets (CN¥10.5B) exceed its short term liabilities (CN¥7.9B).

Long Term Liabilities: 2678's short term assets (CN¥10.5B) exceed its long term liabilities (CN¥5.6B).


Debt to Equity History and Analysis

Debt Level: 2678's debt to equity ratio (102.4%) is considered high.

Reducing Debt: 2678's debt to equity ratio has increased from 94% to 102.4% over the past 5 years.

Debt Coverage: 2678's debt is well covered by operating cash flow (23.7%).

Interest Coverage: 2678's interest payments on its debt are well covered by EBIT (4.3x coverage).


Balance Sheet

Inventory Level: 2678 has a high level of physical assets or inventory.

Debt Coverage by Assets: 2678's debt is covered by short term assets (assets are 1.3x debt).


Next Steps

Dividend

What is Texhong Textile Group's current dividend yield, its reliability and sustainability?

5.06%

Current Dividend Yield


Dividend Yield vs Market

company5.1%marketbottom25%2.2%markettop25%6.3%industryaverage2.6%forecastin3Years5.9%

Current dividend yield vs market & industry

Notable Dividend: 2678's dividend (5.06%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.24%).

High Dividend: 2678's dividend (5.06%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.31%).


Stability and Growth of Payments

Stable Dividend: 2678's dividend payments have been volatile in the past 10 years.

Growing Dividend: 2678's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (30.3%), 2678's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 2678's dividends in 3 years are forecast to be well covered by earnings (30.7% payout ratio).


Next Steps

Management

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

10.4yrs

Average board tenure


CEO

Yongxiang Zhu (53yo)

0yrs

Tenure

CN¥5,539,000

Compensation

Mr. Zhu Yongxiang has been a Co-Chief Executive Officer of Texhong Textile Group Ltd. since October 10, 2011. Mr. Zhu served as the Chief Operating Officer of Texhong Textile Group until October 10, 2011. ...


CEO Compensation Analysis

Compensation vs Market: Yongxiang's total compensation ($USD785.66K) is above average for companies of similar size in the Hong Kong market ($USD461.77K).

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


Board Age and Tenure

10.4yrs

Average Tenure

55yo

Average Age

Experienced Board: 2678's board of directors are seasoned and experienced ( 10.4 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

  • Zhiping Hu (56yo)

    Vice President & General Manager of Taizhou Business Segment

    • Tenure: 0yrs
  • Yongxiang Zhu (53yo)

    CEO & Vice Chairman

    • Tenure: 0yrs
    • Compensation: CN¥5.54m
  • Tsz Wai Hui (46yo)

    Financial Consultant

    • Tenure: 4.8yrs
    • Compensation: CN¥4.28m
  • Tianzhu Hong (51yo)

    Founder & Executive Chairman

    • Tenure: 0yrs
    • Compensation: CN¥2.85m
  • Tao Sha (54yo)

    Vice President and Director of Grey Fabric Production & Management Center

    • Tenure: 0yrs
  • Daoping Tang (54yo)

    COO & Executive Director

    • Tenure: 15.1yrs
    • Compensation: CN¥5.58m
  • Zhongliang Ji (56yo)

    Executive Director

    • Tenure: 4.3yrs
    • Compensation: CN¥1.81m
  • Youchang Cao (50yo)

    Vice President and Director of the Yarn Production and Management Center

    • Tenure: 0yrs

Board Members

  • Stephen Ting (65yo)

    Independent Non-Executive Director

    • Tenure: 15.1yrs
    • Compensation: CN¥263.00k
  • Yongxiang Zhu (53yo)

    CEO & Vice Chairman

    • Tenure: 0yrs
    • Compensation: CN¥5.54m
  • Tsz Wai Hui (46yo)

    Financial Consultant

    • Tenure: 4.8yrs
    • Compensation: CN¥4.28m
  • Tianzhu Hong (51yo)

    Founder & Executive Chairman

    • Tenure: 0yrs
    • Compensation: CN¥2.85m
  • Longdi Cheng (60yo)

    Independent Non-Executive Director

    • Tenure: 15.1yrs
    • Compensation: CN¥131.00k
  • Daoping Tang (54yo)

    COO & Executive Director

    • Tenure: 15.1yrs
    • Compensation: CN¥5.58m
  • Xiaoming Tao (61yo)

    Independent Non-Executive Director

    • Tenure: 5.8yrs
    • Compensation: CN¥158.00k
  • Zhongliang Ji (56yo)

    Executive Director

    • Tenure: 4.3yrs
    • Compensation: CN¥1.81m

Company Information

Texhong Textile Group Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Texhong Textile Group Limited
  • Ticker: 2678
  • Exchange: SEHK
  • Founded: 1997
  • Industry: Textiles
  • Sector: Consumer Durables
  • Market Cap: HK$7.338b
  • Shares outstanding: 915.00m
  • Website: https://www.texhong.com

Number of Employees


Location

  • Texhong Textile Group Limited
  • Lippo Sun Plaza
  • Unit 18, 7th Floor
  • Kowloon
  • Hong Kong

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
2678SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDDec 2004
TTXT.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDDec 2004
2678SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesOrdinary SharesHKHKDDec 2004
2678SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesOrdinary SharesHKHKDDec 2004

Biography

Texhong Textile Group Limited, an investment holding company, primarily manufactures and sells yarns, grey fabrics, and garment fabrics. It also offers dyed clothes and dress, dyed fabrics, textile knittin ...


Company Analysis and Financial Data Status

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