SEHK:420

Stock Analysis Report

Executive Summary

Fountain Set (Holdings) Limited, an investment holding company, produces and sells knitted fabrics and garments in Hong Kong, the People’s Republic of China, Taiwan, Korea, Sri Lanka, the United States, Europe, and internationally.

Snowflake

Fundamentals

Flawless balance sheet and undervalued.

Risks

  • Fountain Set (Holdings) is not covered by any analysts.

Share Price & News

How has Fountain Set (Holdings)'s share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

-0.8%

420

-2.4%

HK Luxury

-2.7%

HK Market


1 Year Return

14.2%

420

5.6%

HK Luxury

-9.4%

HK Market

420 outperformed the Luxury industry which returned 5.6% over the past year.

420 outperformed the Market in Hong Kong which returned -9.4% over the past year.


Share holder returns

420IndustryMarket
7 Day-0.8%-2.4%-2.7%
30 Day-2.4%-0.9%2.4%
90 Day-0.8%5.8%-5.6%
1 Year25.2%14.2%9.2%5.6%-6.2%-9.4%
3 Year46.2%16.3%33.6%17.8%14.3%2.7%
5 Year75.0%28.7%38.4%11.1%16.7%-2.8%

Price Volatility Vs. Market

How volatile is Fountain Set (Holdings)'s share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Fountain Set (Holdings) undervalued based on future cash flows and its price relative to the stock market?

>50%

Discount to future cash flow value


Intrinsic Value Based on Future Cash Flows

Fountain Set (Holdings)'s share price is below the future cash flow value, and at a moderate discount (> 20%).

Fountain Set (Holdings)'s share price is below the future cash flow value, and at a substantial discount (> 40%).


Price Based on Earnings

Fountain Set (Holdings) is good value based on earnings compared to the HK Luxury industry average.

Fountain Set (Holdings) is good value based on earnings compared to the Hong Kong market.


Price Based on Expected Growth

Unable to calculate PEG ratio for Fountain Set (Holdings), we can't assess if its growth is good value.


Price Based on Value of Assets

Fountain Set (Holdings) is good value based on assets compared to the HK Luxury industry average.


Next Steps

Future Growth

How is Fountain Set (Holdings) expected to perform in the next 1 to 3 years based on estimates from 0 analysts?

13.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Estimates


Future Annual Growth Analysis

Unable to determine if Fountain Set (Holdings) is high growth as no revenue estimate data is available.

Fountain Set (Holdings)'s earnings are expected to grow by 13.3% yearly, however this is not considered high growth (20% yearly).

Unable to compare Fountain Set (Holdings)'s revenue growth to the Hong Kong market average as no estimate data is available.

Fountain Set (Holdings)'s earnings growth is expected to exceed the Hong Kong market average.

Fountain Set (Holdings)'s earnings growth is expected to exceed the low risk savings rate of 2%.


Earnings per Share Growth Estimates


Future Return on Equity

Unable to establish if Fountain Set (Holdings) will efficiently use shareholders’ funds in the future without estimates of Return on Equity.


Next Steps

Past Performance

How has Fountain Set (Holdings) performed over the past 5 years?

14.7%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Fountain Set (Holdings)'s year on year earnings growth rate has been positive over the past 5 years.

Fountain Set (Holdings)'s 1-year earnings growth exceeds its 5-year average (18.4% vs 14.7%)

Fountain Set (Holdings)'s earnings growth has exceeded the HK Luxury industry average in the past year (18.4% vs -4.9%).


Return on Equity

Fountain Set (Holdings) has not efficiently used shareholders’ funds last year (Return on Equity less than 20%).


Return on Assets

Fountain Set (Holdings) used its assets less efficiently than the HK Luxury industry average last year based on Return on Assets.


Return on Capital Employed

Fountain Set (Holdings) has significantly improved its use of capital last year versus 3 years ago (Return on Capital Employed).


Next Steps

Financial Health

How is Fountain Set (Holdings)'s financial position?


Financial Position Analysis

Fountain Set (Holdings) is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.

Fountain Set (Holdings)'s cash and other short term assets cover its long term commitments.


Debt to Equity History and Analysis

Fountain Set (Holdings)'s level of debt (20.5%) compared to net worth is satisfactory (less than 40%).

The level of debt compared to net worth has been reduced over the past 5 years (41.5% vs 20.5% today).

Debt is well covered by operating cash flow (91%, greater than 20% of total debt).

Interest payments on debt are well covered by earnings (EBIT is 10.9x coverage).


Balance Sheet

High level of physical assets or inventory.

Debt is covered by short term assets, assets are 5.3x debt.


Next Steps

Dividend

What is Fountain Set (Holdings)'s current dividend yield, its reliability and sustainability?

8.79%

Current Dividend Yield


Dividend Yield and Payments Analysis

Fountain Set (Holdings)'s pays a higher dividend yield than the bottom 25% of dividend payers in Hong Kong (2.21%).

Fountain Set (Holdings)'s dividend is above the markets top 25% of dividend payers in Hong Kong (6.17%).

Fountain Set (Holdings) has been paying a dividend for less than 10 years and during this time payments have been volatile (annual drop of over 20%).

Dividend payments have increased, but Fountain Set (Holdings) only paid a dividend in the past 9 years.


Current Payout to Shareholders

Dividends paid are covered by earnings (1.4x coverage).


Future Payout to Shareholders

Insufficient estimate data to determine if a dividend will be paid in 3 years and that it will be sustainable.


Next Steps

Management

What is the CEO of Fountain Set (Holdings)'s salary, the management and board of directors tenure and is there insider trading?

1.1yrs

Average management tenure


CEO

Yao Zhao (56yo)

4.7yrs

Tenure

HK$4,847,000

Compensation

Mr. Yao Zhao serves as an Assistant President and the General Manager of Asset Management Department of Chinatex Corporation. Mr. Zhao serves as a General Manager of Chinatex Xinyuan Assets Management Co., ...


CEO Compensation Analysis

Yao's remuneration is higher than average for companies of similar size in Hong Kong.

Yao's compensation has been consistent with company performance over the past year, both up more than 20%.


Management Age and Tenure

1.1yrs

Average Tenure

53yo

Average Age

The average tenure for the Fountain Set (Holdings) management team is less than 2 years, this suggests a new team.


Board Age and Tenure

2.2yrs

Average Tenure

54yo

Average Age

The average tenure for the Fountain Set (Holdings) board of directors is less than 3 years, this suggests a new board.


Insider Trading

No 3 month open market individual insider trading information.


Recent Insider Transactions

BuyHK$8,585,09618 Jan 19
Chung Ha
EntityIndividual
Role
Chairman Emeritus
Founder & Honorary Chairman
Shares7,816,000
Max PriceHK$1.10

Ownership Breakdown


Management Team

  • Chung Ha (81yo)

    Founder & Honorary Chairman

    • Tenure: 7.3yrs
    • Compensation: HK$15.68m
  • Charmaine Cheng

    Company Secretary & Deputy GM of Corporate Governance Department

    • Tenure: 3.8yrs
  • Yao Zhao (56yo)

    Chairman & CEO

    • Tenure: 4.7yrs
    • Compensation: HK$4.85m
  • Yongming Tao (53yo)

    Executive Director

    • Tenure: 1.1yrs
  • Xianfu Liu (53yo)

    Executive Director

    • Tenure: 1.1yrs
  • Andrew Yau (50yo)

    Executive Director

    • Tenure: 1.1yrs
    • Compensation: HK$2.87m

Board Members

  • Gordon Yen (49yo)

    Non-Executive Vice Chairman

    • Tenure: 1.1yrs
    • Compensation: HK$200.00k
  • Kwok Tung Ng (68yo)

    Independent Non-Executive Director

    • Tenure: 26.7yrs
    • Compensation: HK$250.00k
  • Chung Ha (81yo)

    Founder & Honorary Chairman

    • Tenure: 7.3yrs
    • Compensation: HK$15.68m
  • Yao Zhao (56yo)

    Chairman & CEO

    • Tenure: 4.7yrs
    • Compensation: HK$4.85m
  • Wei Ying (52yo)

    Independent Non-Executive Director

    • Tenure: 4.7yrs
    • Compensation: HK$200.00k
  • William Lam (60yo)

    Independent Non-Executive Director

    • Tenure: 3.3yrs
    • Compensation: HK$200.00k
  • Yongming Tao (53yo)

    Executive Director

    • Tenure: 1.1yrs
  • Xianfu Liu (53yo)

    Executive Director

    • Tenure: 1.1yrs
  • Andrew Yau (50yo)

    Executive Director

    • Tenure: 1.1yrs
    • Compensation: HK$2.87m
  • Fuji Sun (55yo)

    Non-Executive Director

    • Tenure: 1.1yrs

Company Information

Fountain Set (Holdings) Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Fountain Set (Holdings) Limited
  • Ticker: 420
  • Exchange: SEHK
  • Founded: 1969
  • Industry: Textiles
  • Sector: Consumer Durables
  • Market Cap: HK$1.479b
  • Shares outstanding: 1.22b
  • Website: https://www.fshl.com

Number of Employees


Location

  • Fountain Set (Holdings) Limited
  • Eastern Sea Industrial Building
  • Block A
  • Kwai Chung
  • New Territories
  • Hong Kong

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
420SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDJan 1992
FOVDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992

Biography

Fountain Set (Holdings) Limited, an investment holding company, produces and sells knitted fabrics and garments in Hong Kong, the People’s Republic of China, Taiwan, Korea, Sri Lanka, the United States, Eu ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/09/22 12:39
End of Day Share Price2019/09/20 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.