SEHK:494

Stock Analysis Report

Executive Summary

Li & Fung Limited, an investment holding company, engages in managing the supply chain for retailers and brands worldwide.

Snowflake

Fundamentals

Undervalued average dividend payer.


Similar Companies

Share Price & News

How has Li & Fung's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

0%

494

3.1%

HK Luxury

2.2%

HK Market


1 Year Return

-48.2%

494

21.8%

HK Luxury

-1.3%

HK Market

Return vs Industry: 494 underperformed the Hong Kong Luxury industry which returned 21.8% over the past year.

Return vs Market: 494 underperformed the Hong Kong Market which returned -1.3% over the past year.


Share holder returns

494IndustryMarket
7 Day0%3.1%2.2%
30 Day-18.7%2.7%-2.1%
90 Day-24.3%7.6%-5.6%
1 Year-45.9%-48.2%26.1%21.8%2.3%-1.3%
3 Year-71.2%-77.6%44.7%27.4%15.6%3.9%
5 Year-86.0%-90.4%41.9%14.3%20.1%0.06%

Price Volatility Vs. Market

How volatile is Li & Fung's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Li & Fung undervalued based on future cash flows and its price relative to the stock market?

2%

Discount to future cash flow value


Intrinsic Value Based on Future Cash Flows

Undervalued: 494 (HK$0.87) is trading below our estimate of fair value (HK$0.89)

Significantly Undervalued: 494 is trading below fair value, but not by a significant amount.


Price Based on Earnings

PE vs Industry: 494 is good value based on its PE Ratio (9.5x) compared to the Luxury industry average (9.5x).

PE vs Market: 494 is good value based on its PE Ratio (9.5x) compared to the Hong Kong market (10.3x).


Price Based on Expected Growth

Low PEG Ratio: 494 is good value based on its PEG Ratio (0.5x)


Price Based on Value of Assets

PB vs Industry: 494 is good value based on its PB Ratio (0.5x) compared to the HK Luxury industry average (0.9x).


Next Steps

Future Growth

How is Li & Fung expected to perform in the next 1 to 3 years based on estimates from 3 analysts?

20.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Estimates


Future Annual Growth Analysis

Earnings vs Savings Rate: 494's forecast earnings growth (20.4% per year) is above the savings rate (2%).

Earnings vs Market: 494's earnings (20.4% per year) are forecast to grow faster than the Hong Kong market (11.2% per year).

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

Revenue vs Market: 494's revenue (1% per year) is forecast to grow slower than the Hong Kong market (10.1% per year).

High Growth Revenue: 494's revenue (1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Estimates


Future Return on Equity

High Future ROE: 494's Return on Equity is forecast to be low in 3 years time (6.1%).


Next Steps

Past Performance

How has Li & Fung performed over the past 5 years?

-37.0%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: 494's earnings have declined by -37% per year over the past 5 years.

Accelerating Growth: 494's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 494 had negative earnings growth (-23.5%) over the past year, making it difficult to compare to the Luxury industry average (-4.9%).


Return on Equity

High ROE: 494's Return on Equity (7.2%) is considered low.


Return on Assets

ROA vs Industry: 494's Return on Assets is below or equal to the Luxury industry average last year.


Return on Capital Employed

ROCE Improving: 494's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is Li & Fung's financial position?


Financial Position Analysis

Short Term Liabilities: 494's short term assets (HK$2.5B) do not cover its short term liabilities (HK$3.1B)

Long Term Liabilities: 494's short term assets (HK$2.5B) exceeds its long term liabilities (HK$617.0M)


Debt to Equity History and Analysis

Debt Level: 494's debt to equity ratio (71.3%) is considered high

Reducing Debt: 494's debt to equity ratio has increased from 28.2% to 71.3% over the past 5 years.

Debt Coverage: 494's debt is well covered by operating cash flow (21.3%).

Interest Coverage: 494's interest payments on its debt are well covered by EBIT (4x coverage).


Balance Sheet

Inventory Level: 494 has a low level of unsold assets or inventory.

Debt Coverage by Assets: 494's debt is covered by short term assets (assets are 1.946750x debt).


Next Steps

Dividend

What is Li & Fung's current dividend yield, its reliability and sustainability?

7.85%

Expected Dividend Yield


Dividend Yield vs Market

company8.1%marketbottom25%2.3%markettop25%6.3%industryaverage6.2%forecastin3Years7.9%

Current dividend yield vs market & industry


Dividend Yield and Payments Analysis

Notable Dividend: 494's dividend (8.11%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.25%).

High Dividend: 494's dividend (8.11%) is in the top 25% of dividend payers in the Hong Kong market (6.35%)

Stable Dividend: 494's dividend payments have been volatile in the past 10 years.

Growing Dividend: 494's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (51.2%), 494's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 494's dividends in 3 years are forecast to be covered by earnings (86.8% payout ratio).


Next Steps

Management

What is the CEO of Li & Fung's salary, the management and board of directors tenure and is there insider trading?

4.3yrs

Average management tenure


CEO

Spencer Theodore Fung (46yo)

5.3yrs

Tenure

US$2,056,000

Compensation

Mr. Spencer Theodore Fung has been the Group Chief Executive Officer of Li & Fung Limited since July 7, 2014 and its Executive Director of Li since July 1, 2008. Mr. Fung joined Li & Fung in 2001. He serv ...


CEO Compensation Analysis

Compensation vs. Market: Spencer Theodore's total compensation ($USD2.06M) is above average for companies of similar size in the Hong Kong market ($USD420.49K).

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


Management Age and Tenure

4.3yrs

Average Tenure

54.5yo

Average Age

Experienced Management: 494's management team is considered experienced (4.3 years average tenure).


Board Age and Tenure

7.0yrs

Average Tenure

64.5yo

Average Age

Experienced Board: 494's board of directors are considered experienced (7 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

SellUS$86,938,96202 Jul 19
Capital Research and Management Company
EntityCompany
Shares63,362,000
Max PriceUS$1.37
SellUS$5,011,98514 May 19
Capital Research and Management Company
EntityCompany
Shares3,968,000
Max PriceUS$1.26
BuyUS$8,920,02014 May 19
Silchester International Investors LLP
EntityCompany
Shares7,062,000
Max PriceUS$1.26
SellUS$3,898,06830 Mar 19
Capital Research and Management Company
EntityCompany
Shares2,698,000
Max PriceUS$1.44
SellUS$10,735,32906 Mar 19
Colonial First State Asset Management (Australia) Limited
EntityCompany
Shares7,836,000
Max PriceUS$1.37
BuyUS$7,592,79806 Mar 19
Silchester International Investors LLP
EntityCompany
Shares5,418,000
Max PriceUS$1.40
BuyUS$119,223,78114 Jan 19
Colonial First State Asset Management (Australia) Limited
EntityCompany
Shares86,394,000
Max PriceUS$1.38
BuyUS$11,073,68228 Nov 18
Silchester International Investors LLP
EntityCompany
Shares6,758,000
Max PriceUS$1.64

Ownership Breakdown


Management Team

  • Jason Yeung (64yo)

    Group Chief Compliance & Risk Management Officer

    • Tenure: 4.3yrs
  • Joseph Phi (57yo)

    Group President

    • Tenure: 1.8yrs
    • Compensation: US$1.96m
  • Edward Lam (53yo)

    Chief Financial Officer

    • Tenure: 6.9yrs
  • Spencer Theodore Fung (46yo)

    CEO & Executive Director

    • Tenure: 5.3yrs
    • Compensation: US$2.06m
  • Wilson Zhu (66yo)

    Chief Operating Officer

    • Tenure: 0yrs
  • Roger Young (55yo)

    Chief Human Resources Officer

    • Tenure: 2.9yrs
  • Alison Law (51yo)

    Director of Investor Relations

    • Tenure: 0yrs
  • Darren Palfrey (42yo)

    Chief Digital Officer

    • Tenure: 0yrs
  • Sean Coxall (54yo)

    President of Supply Chain Solutions

    • Tenure: 0yrs
  • Deepika Rana (58yo)

    President of Supply Chain Solutions

    • Tenure: 0yrs

Board Members

  • John Rice (62yo)

    Independent Non-Executive Director

    • Tenure: 1.8yrs
    • Compensation: US$52.00k
  • Allan Wong (68yo)

    Independent Non-Executive Director

    • Tenure: 20.6yrs
    • Compensation: US$71.00k
  • Victor Fung (73yo)

    Honorary Chairman

    • Tenure: 7.4yrs
    • Compensation: US$58.00k
  • William Fung (70yo)

    Group Chairman

    • Tenure: 7.4yrs
    • Compensation: US$1.55m
  • Martin Tang (70yo)

    Independent Non Executive Director

    • Tenure: 10.7yrs
    • Compensation: US$71.00k
  • Joseph Phi (57yo)

    Group President

    • Tenure: 1.8yrs
    • Compensation: US$1.96m
  • Marc Compagnon (60yo)

    Non-Executive Director

    • Tenure: 5.3yrs
    • Compensation: US$2.33m
  • Spencer Theodore Fung (46yo)

    CEO & Executive Director

    • Tenure: 5.3yrs
    • Compensation: US$2.06m
  • Margaret Leung Ko (67yo)

    Independent Non Executive Director

    • Tenure: 6.5yrs
    • Compensation: US$71.00k
  • Chih Cheung (48yo)

    Independent Non-Executive Director

    • Tenure: 2.3yrs
    • Compensation: US$52.00k

Company Information

Li & Fung Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Li & Fung Limited
  • Ticker: 494
  • Exchange: SEHK
  • Founded: 1906
  • Industry: Apparel, Accessories and Luxury Goods
  • Sector: Consumer Durables
  • Market Cap: HK$7.401b
  • Shares outstanding: 8.51b
  • Website: https://www.lifung.com

Number of Employees


Location

  • Li & Fung Limited
  • LiFung Tower
  • 11th Floor
  • Kowloon
  • Kowloon
  • Hong Kong

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
LFUG.FOTCPK (Pink Sheets LLC)YesCommon StockUSUSDJul 1992
LIUBDB (Deutsche Boerse AG)YesCommon StockDEEURJul 1992
494SEHK (The Stock Exchange of Hong Kong Ltd.)YesCommon StockHKHKDJul 1992
494SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesCommon StockHKHKDJul 1992
494SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesCommon StockHKHKDJul 1992
LFUG.YOTCPK (Pink Sheets LLC)UNSPONSORED ADRUSUSDOct 2008

Biography

Li & Fung Limited, an investment holding company, engages in managing the supply chain for retailers and brands worldwide. The company operates through two segments, Services and Products. Its Services seg ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/13 12:43
End of Day Share Price2019/10/11 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.

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