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.

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

3.4%

420

-2.7%

HK Luxury

0.3%

HK Market


1 Year Return

20.6%

420

24.1%

HK Luxury

1.3%

HK Market

Return vs Industry: 420 underperformed the Hong Kong Luxury industry which returned 24.1% over the past year.

Return vs Market: 420 exceeded the Hong Kong Market which returned 1.3% over the past year.


Shareholder returns

420IndustryMarket
7 Day3.4%-2.7%0.3%
30 Day1.7%4.3%0.5%
90 Day3.4%2.5%-4.6%
1 Year32.2%20.6%28.5%24.1%4.9%1.3%
3 Year51.5%20.6%43.3%26.2%15.3%3.7%
5 Year85.8%36.7%43.0%15.2%20.0%-0.006%

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 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: 420 (HK$1.23) is trading below our estimate of fair value (HK$36.57)

Significantly Below Fair Value: 420 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 420 is good value based on its PE Ratio (8.3x) compared to the Luxury industry average (9.3x).

PE vs Market: 420 is good value based on its PE Ratio (8.3x) compared to the Hong Kong market (10.3x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate 420's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: 420 is good value based on its PB Ratio (0.4x) compared to the HK Luxury industry average (0.9x).


Next Steps

Future Growth

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

13.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 420's forecast earnings growth (13.1% per year) is above the savings rate (2%).

Earnings vs Market: 420's earnings (13.1% per year) are forecast to grow faster than the Hong Kong market (11.1% per year).

High Growth Earnings: 420's earnings are forecast to grow, but not significantly.

Revenue vs Market: Insufficient data to determine if 420's revenue is forecast to grow faster than the Hong Kong market.

High Growth Revenue: Insufficient data to determine if 420's revenue is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if 420's Return on Equity is forecast to be high in 3 years time


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

Earnings Trend: 420's earnings have grown by 14.7% per year over the past 5 years.

Accelerating Growth: 420's earnings growth over the past year (18.4%) exceeds its 5-year average (14.7% per year).

Earnings vs Industry: 420 earnings growth over the past year (18.4%) exceeded the Luxury industry -4.9%.


Return on Equity

High ROE: 420's Return on Equity (5.7%) is considered low.


Return on Assets

ROA vs Industry: 420's Return on Assets is below or equal to the Luxury industry average last year.


Return on Capital Employed

ROCE Improving: 420 has significantly improved its Return on Capital Employed over the past 3 years.


Next Steps

Financial Health

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


Financial Position Analysis

Short Term Liabilities: 420's short term assets (HK$3.9B) exceeds its short term liabilities (HK$1.6B)

Long Term Liabilities: 420's short term assets (3.9B) exceeds its long term liabilities (600.3M)


Debt to Equity History and Analysis

Debt Level: 420's debt to equity ratio (20.5%) is considered satisfactory

Reducing Debt: 420's debt to equity ratio has reduced from 41.5% to 20.5% over the past 5 years.

Debt Coverage: 420's debt is well covered by operating cash flow (91%).

Interest Coverage: 420's interest payments on its debt are well covered by EBIT (10.9x coverage).


Balance Sheet

Inventory Level: 420 has a high level of physical assets or inventory.

Debt Coverage by Assets: 420's debt is covered by short term assets (assets are 5.299020x debt).


Next Steps

Dividend

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

8.65%

Current Dividend Yield


Dividend Yield vs Market

company8.6%marketbottom25%2.3%markettop25%6.2%industryaverage2.7%forecastin3Yearsn/a

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: 420's dividend (8.65%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.26%).

High Dividend: 420's dividend (8.65%) is in the top 25% of dividend payers in the Hong Kong market (6.18%)

Stable Dividend: 420 has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: 420's dividend payments have increased, but the company has only paid a dividend for 9 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (71.6%), 420's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


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?

1.2yrs

Average management tenure


CEO

Yao Zhao (56yo)

4.8yrs

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

Compensation vs. Market: Yao's total compensation ($USD618.04K) is about average for companies of similar size in the Hong Kong market ($USD287.57K).

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


Management Age and Tenure

1.2yrs

Average Tenure

53yo

Average Age

Experienced Management: 420's management team is not considered experienced ( 1.2 years average tenure), which suggests a new team.


Board Age and Tenure

2.3yrs

Average Tenure

54yo

Average Age

Experienced Board: 420's board of directors are not considered experienced ( 2.3 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: 420 insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyHK$3,532,91216 Oct 19
Tin Li
EntityIndividual
Shares2,994,000
Max PriceHK$1.18
SellHK$33,436,37030 Sep 19
Chung Ha
EntityIndividual
Role
Chairman Emeritus
Founder & Honorary Chairman
Shares27,184,000
Max PriceHK$1.23
BuyHK$36,000,04827 Sep 19
Tin Li
EntityIndividual
Shares30,000,000
Max PriceHK$1.20
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: 3.9yrs
  • Yao Zhao (56yo)

    Chairman & CEO

    • Tenure: 4.8yrs
    • Compensation: HK$4.85m
  • Yongming Tao (53yo)

    Executive Director

    • Tenure: 1.2yrs
  • Xianfu Liu (53yo)

    Executive Director

    • Tenure: 1.2yrs
  • Andrew Yau (50yo)

    Executive Director

    • Tenure: 1.2yrs
    • Compensation: HK$2.87m

Board Members

  • Gordon Yen (49yo)

    Non-Executive Vice Chairman

    • Tenure: 1.2yrs
    • Compensation: HK$200.00k
  • Kwok Tung Ng (68yo)

    Independent Non-Executive Director

    • Tenure: 26.8yrs
    • Compensation: HK$250.00k
  • Chung Ha (81yo)

    Founder & Honorary Chairman

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

    Chairman & CEO

    • Tenure: 4.8yrs
    • Compensation: HK$4.85m
  • Wei Ying (52yo)

    Independent Non-Executive Director

    • Tenure: 4.8yrs
    • Compensation: HK$200.00k
  • William Lam (60yo)

    Independent Non-Executive Director

    • Tenure: 3.4yrs
    • Compensation: HK$200.00k
  • Yongming Tao (53yo)

    Executive Director

    • Tenure: 1.2yrs
  • Xianfu Liu (53yo)

    Executive Director

    • Tenure: 1.2yrs
  • Andrew Yau (50yo)

    Executive Director

    • Tenure: 1.2yrs
    • Compensation: HK$2.87m
  • Fuji Sun (55yo)

    Non-Executive Director

    • Tenure: 1.2yrs

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$1.528b
  • 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 Analysis2019/10/23 12:36
End of Day Share Price2019/10/23 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.