SEHK:1029

Stock Analysis Report

Executive Summary

IRC Limited, an investment holding company, develops, produces, and sells industrial commodities products in the People’s Republic of China and internationally.

Rewards

Trading at 80.2% below its fair value

Earnings are forecast to grow 22.02% per year

Risk Analysis

Interest payments are not well covered by earnings

Large one-off items impacting financial results

Profit margins (34.4%) are lower than last year (83.7%)

Does not have a meaningful market cap (HK$709M)



Snowflake Analysis

Very undervalued with reasonable growth potential.


Similar Companies

Share Price & News

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


Latest Share Price and Events

Stable Share Price: 1029 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0%

1029

5.3%

HK Metals and Mining

0.6%

HK Market


1 Year Return

-28.4%

1029

-7.3%

HK Metals and Mining

-4.5%

HK Market

Return vs Industry: 1029 underperformed the Hong Kong Metals and Mining industry which returned -6.5% over the past year.

Return vs Market: 1029 underperformed the Hong Kong Market which returned -3.8% over the past year.


Shareholder returns

1029IndustryMarket
7 Day0%5.3%0.6%
30 Day-14.4%-4.3%-5.2%
90 Day-1.0%15.0%2.3%
1 Year-28.4%-28.4%-4.2%-7.3%-1.0%-4.5%
3 Year-76.0%-76.0%-8.3%-14.2%14.4%2.9%
5 Year-77.0%-77.0%9.8%-1.8%15.5%-3.8%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is IRC 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: 1029 (HK$0.1) is trading below our estimate of fair value (HK$0.51)

Significantly Below Fair Value: 1029 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 1029 is good value based on its PE Ratio (1.6x) compared to the Metals and Mining industry average (10.4x).

PE vs Market: 1029 is good value based on its PE Ratio (1.6x) compared to the Hong Kong market (10.1x).


Price to Earnings Growth Ratio

PEG Ratio: 1029 is good value based on its PEG Ratio (0.1x)


Price to Book Ratio

PB vs Industry: 1029 is good value based on its PB Ratio (0.3x) compared to the HK Metals and Mining industry average (0.7x).


Next Steps

Future Growth

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

22.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 1029's forecast earnings growth (22% per year) is above the savings rate (1.6%).

Earnings vs Market: 1029's earnings (22% per year) are forecast to grow faster than the Hong Kong market (11.7% per year).

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

Revenue vs Market: 1029's revenue (14.9% per year) is forecast to grow faster than the Hong Kong market (10.5% per year).

High Growth Revenue: 1029's revenue (14.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 1029's Return on Equity is forecast to be low in 3 years time (12.9%).


Next Steps

Past Performance

How has IRC performed over the past 5 years?

57.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 1029 has a large one-off gain of $78.9M impacting its June 30 2019 financial results.

Growing Profit Margin: 1029's current net profit margins (34.4%) are lower than last year (83.7%).


Past Earnings Growth Analysis

Earnings Trend: 1029 has become profitable over the past 5 years, growing earnings by 57.6% per year.

Accelerating Growth: 1029's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 1029 had negative earnings growth (-45.4%) over the past year, making it difficult to compare to the Metals and Mining industry average (-25%).


Return on Equity

High ROE: 1029's Return on Equity (21.4%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is IRC's financial position?


Financial Position Analysis

Short Term Liabilities: 1029's short term assets ($54.5M) do not cover its short term liabilities ($109.0M).

Long Term Liabilities: 1029's short term assets ($54.5M) do not cover its long term liabilities ($235.0M).


Debt to Equity History and Analysis

Debt Level: 1029's debt to equity ratio (84.5%) is considered high.

Reducing Debt: 1029's debt to equity ratio has increased from 30.3% to 84.5% over the past 5 years.


Balance Sheet

Inventory Level: 1029 has a high level of physical assets or inventory.

Debt Coverage by Assets: 1029's debt is not covered by short term assets (assets are 0.2x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: 1029 is profitable, therefore cash runway is not a concern.

Forecast Cash Runway: 1029 is profitable, therefore cash runway is not a concern.


Next Steps

Dividend

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


Dividend Yield vs Market

companyn/amarketbottom25%2.3%markettop25%6.4%industryaverage3.8%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate 1029's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate 1029's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if 1029's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if 1029's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of 1029'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?

9.3yrs

Average board tenure


CEO

Yury V. Makarov (44yo)

9.5yrs

Tenure

US$1,072,000

Compensation

Mr. Yury V. Makarov has been the Chief Executive Officer of IRC Limited of Petropavlovsk PLC since August 25, 2010. Mr. Makarov served as Chief Operating Officer of IRC Limited (alternate name, is Aricom P ...


CEO Compensation Analysis

Compensation vs Market: Yury V.'s total compensation ($USD1.07M) is above average for companies of similar size in the Hong Kong market ($USD225.53K).

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


Board Members

NamePositionTenureCompensationOwnership
Yury V. Makarov
CEO & Executive Director9.5yrsUS$1.07m0.44% $3.1m
Simon Murray
Independent Non-Executive Director9.3yrsUS$90.00kno data
Peter Charles Percival Hambro
Non-Executive Chairman1.2yrsUS$42.00k0.22% $1.5m
Pavel Maslovskiy
Emeritus Director0yrsUS$98.00kno data
Daniel Bradshaw
Deputy Chairman & Senior Independent Non-Executive Director2.1yrsUS$126.00kno data
Kar Tung Woo
Independent Non-Executive Director9.6yrsUS$90.00k0.10% $743.5k
Chuang-Fei Li
Independent Non-Executive Director9.4yrsUS$126.00kno data
Jonathan Martin Smith
Independent Non-Executive Director9.4yrsUS$126.00kno data
Chi Kin Cheng
Non-Executive Director3yrsUS$90.00kno data

9.3yrs

Average Tenure

63yo

Average Age

Experienced Board: 1029's board of directors are considered experienced (9.3 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

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


Key Information

  • Name: IRC Limited
  • Ticker: 1029
  • Exchange: SEHK
  • Founded: 2010
  • Industry: Steel
  • Sector: Materials
  • Market Cap: HK$709.339m
  • Shares outstanding: 7.09b
  • Website: https://www.ircgroup.com.hk

Number of Employees


Location

  • IRC Limited
  • 6H, 9 Queen’s Road Central
  • Central
  • Hong Kong

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
1029SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDOct 2010
2I8DB (Deutsche Boerse AG)YesOrdinary SharesDEEUROct 2010

Biography

IRC Limited, an investment holding company, develops, produces, and sells industrial commodities products in the People’s Republic of China and internationally. The company operates through four segments: Mines in Production, Mines in Development, Engineering, and Other. The Mines in Production segment comprises iron ore projects in production phase, which include the Kuranakh project that produces titanomagnetite and ilmenite concentrate products located in the Evreyskaya Avtononnaya Oblast, Russia. The Mines in Development segment consists of iron ore projects in the exploration and development phase comprising Garinskoye project that focuses on iron ore deposits in the Amur region; and Bolshoi Seym, an ilmenite and magneite project located in the Russian Far East region. The Engineering segment holds a 70.28% interest in Giproruda, which provides technical mining research and consultancy services. The Other segment has an interest in a joint venture agreement for the production of vanadium pentoxide and related products, as well as various other projects located in Heilongjiang, China. IRC Limited is also involved in the provision of general trading, financing, engineering, and procurement services; and development of titanium sponge. The company was founded in 2010 and is headquartered in Central, Hong Kong. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/18 13:09
End of Day Share Price2020/02/18 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.