SEHK:6858

Stock Analysis Report

Executive Summary

Honma Golf Limited, an investment holding company, designs, develops, manufactures, and sells a range of golf club equipment in Asia, North America, Europe, and internationally.

Rewards

Trading at 42.6% below its fair value

Earnings are forecast to grow 29.74% per year

Risk Analysis

High level of non-cash earnings

Dividend of 4.18% is not well covered by earnings

Highly volatile share price over past 3 months

Profit margins (7.5%) are lower than last year (18.2%)



Snowflake Analysis

Reasonable growth potential with adequate balance sheet.

Share Price & News

How has Honma Golf's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 6858's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

7.0%

6858

-0.3%

HK Leisure

-4.3%

HK Market


1 Year Return

-27.5%

6858

-19.9%

HK Leisure

-0.7%

HK Market

Return vs Industry: 6858 underperformed the Hong Kong Leisure industry which returned -21.6% over the past year.

Return vs Market: 6858 underperformed the Hong Kong Market which returned 6.4% over the past year.


Shareholder returns

6858IndustryMarket
7 Day7.0%-0.3%-4.3%
30 Day2.4%-2.3%-0.2%
90 Day-12.0%-3.0%4.1%
1 Year-17.2%-27.5%-16.2%-19.9%3.0%-0.7%
3 Year-5.7%-23.2%-33.4%-38.1%20.2%8.0%
5 Yearn/a-45.3%-48.3%18.7%-1.1%

Price Volatility Vs. Market

How volatile is Honma Golf's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Honma Golf undervalued compared to its fair value and its price relative to the market?

41.5%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 6858 (HK$5.54) is trading below our estimate of fair value (HK$9.65)

Significantly Below Fair Value: 6858 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 6858 is poor value based on its PE Ratio (23.6x) compared to the Leisure industry average (8.1x).

PE vs Market: 6858 is poor value based on its PE Ratio (23.6x) compared to the Hong Kong market (10.5x).


Price to Earnings Growth Ratio

PEG Ratio: 6858 is good value based on its PEG Ratio (0.8x)


Price to Book Ratio

PB vs Industry: 6858 is overvalued based on its PB Ratio (2.1x) compared to the HK Leisure industry average (0.9x).


Next Steps

Future Growth

How is Honma Golf forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

29.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 6858's forecast earnings growth (29.7% per year) is above the savings rate (1.6%).

Earnings vs Market: 6858's earnings (29.7% per year) are forecast to grow faster than the Hong Kong market (11.3% per year).

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

Revenue vs Market: 6858's revenue (13.2% per year) is forecast to grow faster than the Hong Kong market (10.2% per year).

High Growth Revenue: 6858's revenue (13.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 6858's Return on Equity is forecast to be low in 3 years time (15.1%).


Next Steps

Past Performance

How has Honma Golf performed over the past 5 years?

3.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 6858 has a high level of non-cash earnings.

Growing Profit Margin: 6858's current net profit margins (7.5%) are lower than last year (18.2%).


Past Earnings Growth Analysis

Earnings Trend: 6858's earnings have grown by 3.3% per year over the past 5 years.

Accelerating Growth: 6858's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 6858 had negative earnings growth (-59.2%) over the past year, making it difficult to compare to the Leisure industry average (-9.2%).


Return on Equity

High ROE: 6858's Return on Equity (8.8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Honma Golf's financial position?


Financial Position Analysis

Short Term Liabilities: 6858's short term assets (¥28.1B) exceed its short term liabilities (¥12.0B).

Long Term Liabilities: 6858's short term assets (¥28.1B) exceed its long term liabilities (¥3.0B).


Debt to Equity History and Analysis

Debt Level: 6858's debt to equity ratio (24.3%) is considered satisfactory.

Reducing Debt: 6858's debt to equity ratio has increased from 15.9% to 24.3% over the past 5 years.

Debt Coverage: 6858's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: 6858 earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: 6858 has a high level of physical assets or inventory.

Debt Coverage by Assets: 6858's debt is covered by short term assets (assets are 5x debt).


Next Steps

Dividend

What is Honma Golf's current dividend yield, its reliability and sustainability?

4.12%

Current Dividend Yield


Dividend Yield vs Market

company4.1%marketbottom25%2.2%markettop25%6.2%industryaverage4.8%forecastin3Years4.6%

Current dividend yield vs market & industry

Notable Dividend: 6858's dividend (4.18%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.17%).

High Dividend: 6858's dividend (4.18%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.02%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, 6858 has been paying a dividend for less than 10 years.

Growing Dividend: 6858's dividend payments have increased, but the company has only paid a dividend for 2 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (100.5%), 6858's dividend payments are not well 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 Honma Golf's salary, the management and board of directors tenure and is there insider trading?

3.6yrs

Average management tenure


CEO

Jianguo Liu (50yo)

3.6yrs

Tenure

JP¥18,464,000

Compensation

Mr. Jianguo Liu has been Chairman of the Board and President of Honma Golf Limited and Honma Golf Co., Ltd., since June 14, 2016. Mr. Liu is responsible for formulating the overall development strategies a ...


CEO Compensation Analysis

Compensation vs Market: Jianguo's total compensation ($USD167.71K) is below average for companies of similar size in the Hong Kong market ($USD340.45K).

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


Management Age and Tenure

3.6yrs

Average Tenure

58yo

Average Age

Experienced Management: 6858's management team is considered experienced (3.6 years average tenure).


Board Age and Tenure

3.3yrs

Average Tenure

58yo

Average Age

Experienced Board: 6858's board of directors are considered experienced (3.3 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

SellHK$808,98025 Mar 19
Yasuki Ito
EntityIndividual
Role
Member of the Board of Directors
Chief Marketing Officer
Shares97,000
Max PriceHK$8.34
SellHK$170,35522 Mar 19
Yasuki Ito
EntityIndividual
Role
Member of the Board of Directors
Chief Marketing Officer
Shares20,500
Max PriceHK$8.31
SellHK$21,62522 Mar 19
Yasuki Ito
EntityIndividual
Role
Member of the Board of Directors
Chief Marketing Officer
Shares2,500
Max PriceHK$8.65

Ownership Breakdown

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


Management Team

  • Jianguo Liu (50yo)

    Chairman & President

    • Tenure: 3.6yrs
    • Compensation: JP¥18.46m
  • Yasuki Ito (58yo)

    Chief Marketing Officer

    • Tenure: 3.6yrs
    • Compensation: JP¥15.17m
  • Yuji Murai (59yo)

    Chief Sales Officer

    • Tenure: 3.6yrs
    • Compensation: JP¥14.02m
  • Jun Zuo (46yo)

    Chief Administrative Officer

    • Tenure: 3.6yrs
    • Compensation: JP¥10.59m
  • Hiroshi Suwa (63yo)

    Managing Executive Officer of Product Development

    • Tenure: 3.6yrs
  • Kenji Ueda (62yo)

    Director of Golf Club Manufacturing & Procurement Dept. and Executive Officer of Production

    • Tenure: 4.7yrs
  • Weiwen Bian (49yo)

    CFO & COO

    • Tenure: 3.6yrs
  • Ying Man Sham

    Company Secretary

    • Tenure: 1.2yrs

Board Members

  • Robert Ho (70yo)

    Non-Executive Director

    • Tenure: 1.2yrs
    • Compensation: JP¥1.16m
  • Xiaoping Yang (55yo)

    Non Executive Director

    • Tenure: 1.7yrs
    • Compensation: JP¥2.74m
  • Jianguo Wang (59yo)

    Independent Non-Executive Director

    • Tenure: 3.3yrs
    • Compensation: JP¥5.07m
  • Jianguo Liu (50yo)

    Chairman & President

    • Tenure: 3.6yrs
    • Compensation: JP¥18.46m
  • Yasuki Ito (58yo)

    Chief Marketing Officer

    • Tenure: 3.6yrs
    • Compensation: JP¥15.17m
  • Yuji Murai (59yo)

    Chief Sales Officer

    • Tenure: 3.6yrs
    • Compensation: JP¥14.02m
  • Jun Zuo (46yo)

    Chief Administrative Officer

    • Tenure: 3.6yrs
    • Compensation: JP¥10.59m
  • Christopher Lu (60yo)

    Independent Non-Executive Director

    • Tenure: 3.3yrs
    • Compensation: JP¥8.40m
  • Hui Xu (46yo)

    Independent Non-Executive Director

    • Tenure: 3.3yrs
    • Compensation: JP¥5.07m

Company Information

Honma Golf Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Honma Golf Limited
  • Ticker: 6858
  • Exchange: SEHK
  • Founded: 1959
  • Industry: Leisure Products
  • Sector: Consumer Durables
  • Market Cap: HK$3.441b
  • Shares outstanding: 609.05m
  • Website: https://www.honmagolf.co.jp

Number of Employees


Location

  • Honma Golf Limited
  • Roppongi Hills Mori Tower
  • 35th Floor
  • Tokyo
  • 106-6135
  • Japan

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
6858SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDOct 2016
HF5DB (Deutsche Boerse AG)YesOrdinary SharesDEEUROct 2016
HNMG.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDOct 2016

Biography

Honma Golf Limited, an investment holding company, designs, develops, manufactures, and sells a range of golf club equipment in Asia, North America, Europe, and internationally. It offers driver, fairway wood, utility, iron, wedge, and putter clubs; golf balls, golf bags, golf club head covers, gloves, shoes, and other golf-related accessories; and apparel for men and women under the BERES, TOUR WORLD, Be ZEAL, and HONMA brands. The company distributes its products through HONMA-branded self-operated stores; direct third-party retailers, including sports megastores; and wholesale distributors that on-sell its products to other third parties. As of March 31, 2019, it had 68 HONMA-branded self-operated stores. Honma Golf Limited was founded in 1959 and is headquartered in Tokyo, Japan. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/01/25 13:16
End of Day Share Price2020/01/24 00:00
Earnings2019/09/30
Annual Earnings2019/03/31


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.