The underwhelming share price performance of Tungtex (Holdings) Company Limited (HKG:518) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 25 August 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.
Comparing Tungtex (Holdings) Company Limited's CEO Compensation With the industry
At the time of writing, our data shows that Tungtex (Holdings) Company Limited has a market capitalization of HK$178m, and reported total annual CEO compensation of HK$2.7m for the year to March 2021. That's a notable increase of 20% on last year. In particular, the salary of HK$2.61m, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was HK$2.3m. This suggests that Tungtex (Holdings) remunerates its CEO largely in line with the industry average.
Speaking on an industry level, nearly 91% of total compensation represents salary, while the remainder of 9% is other remuneration. Investors will find it interesting that Tungtex (Holdings) pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Tungtex (Holdings) Company Limited's Growth
Tungtex (Holdings) Company Limited's earnings per share (EPS) grew 97% per year over the last three years. It saw its revenue drop 35% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Tungtex (Holdings) Company Limited Been A Good Investment?
Given the total shareholder loss of 20% over three years, many shareholders in Tungtex (Holdings) Company Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.
Raymond receives almost all of their compensation through a salary. The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Tungtex (Holdings) (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.
Important note: Tungtex (Holdings) is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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