GDH Guangnan (Holdings) Limited's (HKG:1203) CEO Will Probably Find It Hard To See A Huge Raise This Year

In the past three years, shareholders of GDH Guangnan (Holdings) Limited (HKG:1203) have seen a loss on their investment. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 18 June 2021. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

View our latest analysis for GDH Guangnan (Holdings)

Comparing GDH Guangnan (Holdings) Limited's CEO Compensation With the industry

According to our data, GDH Guangnan (Holdings) Limited has a market capitalization of HK$644m, and paid its CEO total annual compensation worth HK$1.4m over the year to December 2020. We note that's an increase of 45% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at HK$600k.

For comparison, other companies in the industry with market capitalizations below HK$1.6b, reported a median total CEO compensation of HK$1.4m. So it looks like GDH Guangnan (Holdings) compensates Jinzhou He in line with the median for the industry.

Component	2020	2019	Proportion (2020)
Salary	HK$600k	HK$412k	42%
Other	HK$841k	HK$584k	58%
Total Compensation	HK$1.4m	HK$996k	100%

On an industry level, roughly 84% of total compensation represents salary and 16% is other remuneration. It's interesting to note that GDH Guangnan (Holdings) allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at GDH Guangnan (Holdings) Limited's Growth Numbers

Over the past three years, GDH Guangnan (Holdings) Limited has seen its earnings per share (EPS) grow by 2.0% per year. It achieved revenue growth of 7.1% over the last year.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but it is good to see modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has GDH Guangnan (Holdings) Limited Been A Good Investment?

Given the total shareholder loss of 14% over three years, many shareholders in GDH Guangnan (Holdings) Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 1 which is concerning) in GDH Guangnan (Holdings) we think you should know about.

Important note: GDH Guangnan (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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