SEHK:196

Stock Analysis Report

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Market Cap

HK$1.5b

Last Updated

2021/06/20 10:20 UTC

Data Sources

Company Financials +

Executive Summary

Honghua Group Limited, an investment holding company, engages in the research, design, manufacture, setting, and sale of land rigs, related parts, and components. More Details


Snowflake Analysis

Reasonable growth potential and slightly overvalued.


Similar Companies

Share Price & News

How has Honghua Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 196 is not significantly more volatile than the rest of Hong Kong stocks over the past 3 months, typically moving +/- 8% a week.

Volatility Over Time: 196's weekly volatility (8%) has been stable over the past year.


Market Performance


7 Day Return

5.6%

196

-5.7%

HK Energy Services

-1.3%

HK Market


1 Year Return

14.0%

196

12.0%

HK Energy Services

21.7%

HK Market

Return vs Industry: 196 exceeded the Hong Kong Energy Services industry which returned 12% over the past year.

Return vs Market: 196 underperformed the Hong Kong Market which returned 21.7% over the past year.


Shareholder returns

196IndustryMarket
7 Day5.6%-5.7%-1.3%
30 Day11.8%-7.7%0.2%
90 Day3.6%-5.3%-2.2%
1 Year14.0%14.0%14.4%12.0%26.3%21.7%
3 Year-61.0%-61.0%-19.7%-22.7%10.1%-1.6%
5 Year-10.9%-10.9%-18.2%-21.0%59.7%32.5%

Long-Term Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Honghua Group undervalued compared to its fair value and its price relative to the market?

25.26x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: Insufficient data to calculate 196's fair value to establish if it is undervalued.

Significantly Below Fair Value: Insufficient data to calculate 196's fair value to establish if it is undervalued.


Price To Earnings Ratio

PE vs Industry: 196 is poor value based on its PE Ratio (25.3x) compared to the Hong Kong Energy Services industry average (14x).

PE vs Market: 196 is poor value based on its PE Ratio (25.3x) compared to the Hong Kong market (11.5x).


Price to Earnings Growth Ratio

PEG Ratio: 196 is good value based on its PEG Ratio (0.6x)


Price to Book Ratio

PB vs Industry: 196 is good value based on its PB Ratio (0.3x) compared to the HK Energy Services industry average (0.6x).


Future Growth

How is Honghua Group forecast to perform in the next 1 to 3 years based on estimates from 1 analyst?

45.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 196's forecast earnings growth (45.6% per year) is above the savings rate (1.5%).

Earnings vs Market: 196's earnings (45.6% per year) are forecast to grow faster than the Hong Kong market (19.4% per year).

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

Revenue vs Market: 196's revenue (15.3% per year) is forecast to grow faster than the Hong Kong market (12.8% per year).

High Growth Revenue: 196's revenue (15.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 196's Return on Equity is forecast to be low in 3 years time (6.2%).


Past Performance

How has Honghua Group performed over the past 5 years?

56.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 196 has a large one-off gain of CN¥14.7M impacting its December 31 2020 financial results.

Growing Profit Margin: 196's current net profit margins (1.3%) are lower than last year (2.4%).


Past Earnings Growth Analysis

Earnings Trend: 196 has become profitable over the past 5 years, growing earnings by 56.7% per year.

Accelerating Growth: 196's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 196 had negative earnings growth (-53.7%) over the past year, making it difficult to compare to the Energy Services industry average (-4.3%).


Return on Equity

High ROE: 196's Return on Equity (1.3%) is considered low.


Financial Health

How is Honghua Group's financial position?


Financial Position Analysis

Short Term Liabilities: 196's short term assets (CN¥7.8B) exceed its short term liabilities (CN¥5.2B).

Long Term Liabilities: 196's short term assets (CN¥7.8B) exceed its long term liabilities (CN¥2.3B).


Debt to Equity History and Analysis

Debt Level: 196's debt to equity ratio (99.8%) is considered high.

Reducing Debt: 196's debt to equity ratio has increased from 97.7% to 99.8% over the past 5 years.

Debt Coverage: 196's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: 196's interest payments on its debt are not well covered by EBIT (1.5x coverage).


Balance Sheet


Dividend

What is Honghua Group current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

Notable Dividend: Unable to evaluate 196's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate 196's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if 196's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if 196's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: 196 is not paying a notable dividend for the Hong Kong market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of 196's dividend in 3 years as they are not forecast to pay a notable one for the Hong Kong market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

4.5yrs

Average management tenure


CEO

Mi Zhang (63 yo)

no data

Tenure

CN¥1,460,000

Compensation

Mr. Mi Zhang serves as the President of Honghua Group Limited and has been its Executive Director since June 2007. Mr. Zhang is responsible for the development of the ZJ70LC drilling rig, which was one of ...


CEO Compensation Analysis

Compensation vs Market: Mi's total compensation ($USD226.25K) is about average for companies of similar size in the Hong Kong market ($USD277.08K).

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


Leadership Team

Experienced Management: 196's management team is considered experienced (4.5 years average tenure).


Board Members

Experienced Board: 196's board of directors are considered experienced (4.3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

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


Top Shareholders

Company Information

Honghua Group Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Honghua Group Limited
  • Ticker: 196
  • Exchange: SEHK
  • Founded: 1997
  • Industry: Oil and Gas Equipment and Services
  • Sector: Energy
  • Market Cap: HK$1.492b
  • Shares outstanding: 5.23b
  • Website: https://www.hh-gltd.com

Number of Employees


Location

  • Honghua Group Limited
  • Information Park
  • 99 East Road
  • Chengdu
  • Sichuan Province
  • 610036
  • China

Listings


Biography

Honghua Group Limited, an investment holding company, engages in the research, design, manufacture, setting, and sale of land rigs, related parts, and components. It operates through Land Drilling Rigs; Pa...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/06/20 10:20
End of Day Share Price2021/06/18 00:00
Earnings2020/12/31
Annual Earnings2020/12/31


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.