Weiqiao Textile (SEHK:2698) - Share price, News & Analysis

Q: What is the Fair Price of 2698 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

2698 (HK$1.88) is trading below our estimate of [[fair value]] (HK$3.66)

2698 fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	0/6
Past Performance	4/6
Financial Health	5/6
Dividends	4/6

2698 Stock Overview

Rewards

Trading at 48.7% below our estimate of its fair value

Earnings grew by 199.8% over the past year

Risk Analysis

Earnings have declined by 18.4% per year over past 5 years

Dividend of 11.2% is not well covered by earnings

Weiqiao Textile Competitors

Texwinca Holdings

SEHK:321

HK$2.1b

Best Pacific International Holdings

SEHK:2111

HK$2.0b

Fountain Set (Holdings)

SEHK:420

HK$1.3b

Pacific Textiles Holdings

SEHK:1382

HK$4.5b

Price History & Performance

Summary of all time highs, changes and price drops for Weiqiao Textile
Historical stock prices
Current Share Price	HK$1.88
52 Week High	HK$3.29
52 Week Low	HK$1.85
Beta	0.89
1 Month Change	-13.36%
3 Month Change	-18.62%
1 Year Change	-25.98%
3 Year Change	-26.56%
5 Year Change	n/a
Change since IPO	-80.11%

Recent News & Updates

Mar 23

Returns On Capital Signal Difficult Times Ahead For Weiqiao Textile (HKG:2698)

To avoid investing in a business that's in decline, there's a few financial metrics that can provide early indications...

Shareholder Returns

	2698	HK Luxury	HK Market
7D	0.5%	8.0%	3.1%
1Y	-26.0%	-36.5%	-21.2%

Return vs Industry: 2698 exceeded the Hong Kong Luxury industry which returned -35% over the past year.

Return vs Market: 2698 underperformed the Hong Kong Market which returned -20.1% over the past year.

Price Volatility

Is 2698's price volatile compared to industry and market?
2698 volatility
2698 Average Weekly Movement	3.9%
Luxury Industry Average Movement	6.5%
Market Average Movement	6.9%
10% most volatile stocks in HK Market	13.7%
10% least volatile stocks in HK Market	3.3%

Stable Share Price: 2698 is less volatile than 75% of Hong Kong stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: 2698's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1999	40,000	Jiakun Wei	https://www.wqfz.com

Weiqiao Textile Company Limited, together with its subsidiaries, engages in the manufacture and sale of cotton yarns, grey fabrics, and denims in Mainland China, Hong Kong, East Asia, Southeast Asia, South Asia, and internationally. The company operates through Textile Products, and Electricity and Steam segments. It also produces and sells polyester yarn and related products; and trades in textile raw materials and products.

Weiqiao Textile Fundamentals Summary

How do Weiqiao Textile's earnings and revenue compare to its market cap?
2698 fundamental statistics
Market Cap	CN¥1.92b
Earnings (TTM)	CN¥614.19m
Revenue (TTM)	CN¥16.26b

3.1x

P/E Ratio

0.1x

P/S Ratio

Is 2698 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
2698 income statement (TTM)
Revenue	CN¥16.26b
Cost of Revenue	CN¥14.96b
Gross Profit	CN¥1.30b
Other Expenses	CN¥687.71m
Earnings	CN¥614.19m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	0.51
Gross Margin	8.00%
Net Profit Margin	3.78%
Debt/Equity Ratio	14.5%

How did 2698 perform over the long term?

See historical performance and comparison

Dividends

11.2%

Current Dividend Yield

35%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is 2698 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 2698?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 2698. This is calculated by dividing 2698's market cap by their current preferred multiple.
What is 2698's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CN¥1.92b

2698 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	n/a
Enterprise Value/EBITDA	n/a
PEG Ratio	n/a

Price to Earnings Ratio vs Peers

How does 2698's PE Ratio compare to its peers?

2698 PE Ratio vs Peers

The above table shows the PE ratio for 2698 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	7.3x
321 Texwinca Holdings	10.8x	n/a	HK$2.1b
2111 Best Pacific International Holdings	5.1x	17.9%	HK$2.0b
420 Fountain Set (Holdings)	5.5x	n/a	HK$1.3b
1382 Pacific Textiles Holdings	7.9x	16.8%	HK$4.5b
2698 Weiqiao Textile	3.1x	n/a	HK$2.2b

Forward PE

Price-To-Earnings vs Peers: 2698 is good value based on its Price-To-Earnings Ratio (3.1x) compared to the peer average (7.3x).

Price to Earnings Ratio vs Industry

How does 2698's PE Ratio compare vs other companies in the HK Luxury Industry?

Price-To-Earnings vs Industry: 2698 is good value based on its Price-To-Earnings Ratio (3.1x) compared to the Hong Kong Luxury industry average (8.5x)

Price to Earnings Ratio vs Fair Ratio

What is 2698's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

2698 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	3.1x
Fair PE Ratio	n/a

Price-To-Earnings vs Fair Ratio: Insufficient data to calculate 2698's Price-To-Earnings Fair Ratio for valuation analysis.

Share Price vs Fair Value

What is the Fair Price of 2698 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 2698 (HK$1.88) is trading below our estimate of fair value (HK$3.66)

Significantly Below Fair Value: 2698 is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate 2698's PEG Ratio to determine if it is good value.

Discover undervalued companies

Future Growth

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

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

20.6%

Forecasted Consumer Durables 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 Weiqiao Textile 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.

Discover growth companies

Examine whether Weiqiao Textile is trading at an attractive price based on how much it is expected to earn in the future, and relative to its industry peers and the wider market.
Weiqiao Textile competitive advantages and company strategy can generally be found in its financial reports archived here.

Past Performance

How has Weiqiao Textile performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-18.4%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 2698 has high quality earnings.

Growing Profit Margin: 2698's current net profit margins (3.8%) are higher than last year (1.6%).

Past Earnings Growth Analysis

Earnings Trend: 2698's earnings have declined by 18.4% per year over the past 5 years.

Accelerating Growth: 2698's earnings growth over the past year (199.8%) exceeds its 5-year average (-18.4% per year).

Earnings vs Industry: 2698 earnings growth over the past year (199.8%) exceeded the Luxury industry 43%.

Return on Equity

High ROE: 2698's Return on Equity (3.2%) is considered low.

Discover strong past performing companies

Financial Health

How is Weiqiao Textile's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: 2698's short term assets (CN¥15.9B) exceed its short term liabilities (CN¥5.5B).

Long Term Liabilities: 2698's short term assets (CN¥15.9B) exceed its long term liabilities (CN¥668.7M).

Debt to Equity History and Analysis

Debt Level: 2698 has more cash than its total debt.

Reducing Debt: 2698's debt to equity ratio has reduced from 60.4% to 14.5% over the past 5 years.

Debt Coverage: 2698's debt is not well covered by operating cash flow (5.8%).

Interest Coverage: 2698's interest payments on its debt are well covered by EBIT (91.9x coverage).

Balance Sheet

Discover healthy companies

Dividend

What is Weiqiao Textile current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

11.20%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: 2698's dividend (11.2%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.7%).

High Dividend: 2698's dividend (11.2%) is in the top 25% of dividend payers in the Hong Kong market (7.69%)

Stability and Growth of Payments

Stable Dividend: 2698's dividend payments have been volatile in the past 10 years.

Growing Dividend: 2698's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (35%), 2698's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its high cash payout ratio (285.5%), 2698's dividend payments are not well covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

12.3yrs

Average management tenure

CEO

Jiakun Wei (53 yo)

7.58yrs

Tenure

CN¥710,000

Compensation

Mr. Wei Jiakun has been the General Manager and Chief Executive officer of Weiqiao Textile Co. Ltd. since November 18, 2014 and serves as Executive Director. Mr. Wei joined the Company's predecessor, Weiq...

CEO Compensation Analysis

Compensation vs Market: Jiakun's total compensation ($USD105.85K) is below average for companies of similar size in the Hong Kong market ($USD308.34K).

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

Leadership Team

Experienced Management: 2698's management team is seasoned and experienced (12.3 years average tenure).

Board Members

Experienced Board: 2698's board of directors are seasoned and experienced ( 12.1 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

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

Data	Last Updated (UTC time)
Company Analysis	2022/06/29 00:00
End of Day Share Price	2022/06/29 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31