SEHK:581

Stock Analysis Report

China Oriental Group

Executive Summary

China Oriental Group Company Limited, an investment holding company, manufactures and sells iron and steel products for downstream steel manufacturers in the People’s Republic of China.

Rewards

PE ratio (2.8x) is below the Hong Kong market (10.4x)

Risk Analysis

Unstable dividend track record

Profit margins (8.6%) are lower than last year (13.9%)

Shareholders have been diluted in the past year



Snowflake Analysis

Flawless balance sheet established dividend payer.

Share Price & News

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


Latest Share Price and Events

Stable Share Price: 581 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.3%

581

-6.0%

HK Metals and Mining

-3.4%

HK Market


1 Year Return

-42.4%

581

-1.7%

HK Metals and Mining

-0.4%

HK Market

Return vs Industry: 581 underperformed the Hong Kong Metals and Mining industry which returned 6.6% over the past year.

Return vs Market: 581 underperformed the Hong Kong Market which returned 6.4% over the past year.


Shareholder returns

581IndustryMarket
7 Day-1.3%-6.0%-3.4%
30 Day-5.1%-0.7%-1.2%
90 Day6.5%12.6%3.7%
1 Year-37.1%-42.4%1.6%-1.7%3.3%-0.4%
3 Yearn/a-6.8%-12.5%20.4%8.2%
5 Yearn/a8.7%-2.8%19.6%-0.4%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

2.8x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: 581 (HK$2.99) is trading above our estimate of fair value (HK$2.89)

Significantly Below Fair Value: 581 is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: 581 is good value based on its PE Ratio (2.9x) compared to the Metals and Mining industry average (10.3x).

PE vs Market: 581 is good value based on its PE Ratio (2.9x) compared to the Hong Kong market (10.5x).


Price to Earnings Growth Ratio

PEG Ratio: 581 is poor value based on its PEG Ratio (4.9x)


Price to Book Ratio

PB vs Industry: 581 is good value based on its PB Ratio (0.5x) compared to the HK Metals and Mining industry average (0.8x).


Next Steps

Future Growth

How is China Oriental Group forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

0.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 581's forecast earnings growth (0.8% per year) is below the savings rate (1.6%).

Earnings vs Market: 581's earnings (0.6% per year) are forecast to grow slower than the Hong Kong market (11.3% per year).

High Growth Earnings: 581's earnings are forecast to grow, but not significantly.

Revenue vs Market: 581's revenue is expected to decline over the next 3 years (-1% per year).

High Growth Revenue: 581's revenue is forecast to decline over the next 3 years (-1% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 581's Return on Equity is forecast to be low in 3 years time (13.1%).


Next Steps

Past Performance

How has China Oriental Group performed over the past 5 years?

61.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 581 has high quality earnings.

Growing Profit Margin: 581's current net profit margins (8.6%) are lower than last year (13.9%).


Past Earnings Growth Analysis

Earnings Trend: 581's earnings have grown significantly by 61.6% per year over the past 5 years.

Accelerating Growth: 581's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 581 had negative earnings growth (-41.1%) over the past year, making it difficult to compare to the Metals and Mining industry average (-22.2%).


Return on Equity

High ROE: 581's Return on Equity (18.8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is China Oriental Group's financial position?


Financial Position Analysis

Short Term Liabilities: 581's short term assets (CN¥20.1B) exceed its short term liabilities (CN¥12.6B).

Long Term Liabilities: 581's short term assets (CN¥20.1B) exceed its long term liabilities (CN¥1.0B).


Debt to Equity History and Analysis

Debt Level: 581's debt to equity ratio (21.2%) is considered satisfactory.

Reducing Debt: 581's debt to equity ratio has reduced from 92% to 21.2% over the past 5 years.

Debt Coverage: 581's debt is well covered by operating cash flow (147.7%).

Interest Coverage: 581 earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: 581 has a high level of physical assets or inventory.

Debt Coverage by Assets: 581's debt is covered by short term assets (assets are 5x debt).


Next Steps

Dividend

What is China Oriental Group's current dividend yield, its reliability and sustainability?

8.35%

Current Dividend Yield


Dividend Yield vs Market

company8.4%marketbottom25%2.2%markettop25%6.2%industryaverage4.0%forecastin3Years8.3%

Current dividend yield vs market & industry

Notable Dividend: 581's dividend (8.22%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.17%).

High Dividend: 581's dividend (8.22%) is in the top 25% of dividend payers in the Hong Kong market (6.02%)


Stability and Growth of Payments

Stable Dividend: 581's dividend payments have been volatile in the past 10 years.

Growing Dividend: 581's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (20.2%), 581's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 581's dividends in 3 years are forecast to be well covered by earnings (29.7% payout ratio).


Next Steps

Management

What is the CEO of China Oriental Group's salary, the management and board of directors tenure and is there insider trading?

12.2yrs

Average management tenure


CEO

Jingyuan Han (62yo)

16.2yrs

Tenure

CN¥24,259,000

Compensation

Mr. Jingyuan Han has been the Chairman and Chief Executive Officer of China Oriental Group Co. Ltd. since November 13, 2003. Mr. Han serves as the Chairman of Hebei Jinxi Iron and Steel Company Limited. He ...


CEO Compensation Analysis

Compensation vs Market: Jingyuan's total compensation ($USD3.52M) is above average for companies of similar size in the Hong Kong market ($USD547.75K).

Compensation vs Earnings: Jingyuan's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Management Age and Tenure

12.2yrs

Average Tenure

51yo

Average Age

Experienced Management: 581's management team is seasoned and experienced (12.2 years average tenure).


Board Age and Tenure

10.0yrs

Average Tenure

54yo

Average Age

Experienced Board: 581's board of directors are seasoned and experienced ( 10 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

BuyHK$355,349,99321 May 19
Wellbeing Holdings Limited
EntityCompany
Shares69,000,000
Max PriceHK$5.15
BuyHK$9,574,44820 May 19
Wellbeing Holdings Limited
EntityCompany
Shares2,034,000
Max PriceHK$4.71
BuyHK$8,715,52820 May 19
Wellbeing Holdings Limited
EntityCompany
Shares1,816,000
Max PriceHK$4.80
BuyHK$5,241,01117 May 19
Wellbeing Holdings Limited
EntityCompany
Shares1,150,000
Max PriceHK$4.56

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 2.9%.


Management Team

  • Jun Zhu (55yo)

    COO, Executive Deputy GM & Executive Director

    • Tenure: 16.1yrs
    • Compensation: CN¥8.07m
  • Hao Zhu (52yo)

    Executive Director

    • Tenure: 12.2yrs
    • Compensation: CN¥1.56m
  • Xiaoling Shen (58yo)

    Executive Director

    • Tenure: 14.5yrs
    • Compensation: CN¥4.64m
  • Jingyuan Han (62yo)

    Chairman & CEO

    • Tenure: 16.2yrs
    • Compensation: CN¥24.26m
  • Jianshui Yu (51yo)

    GM of Hebei Jinxi Iron & Steel Group Special Steel Company Limited

    • Compensation: CN¥488.00k
  • Sanjay Sharma (47yo)

    Executive Director

    • Tenure: 0.3yrs
  • Li Han (32yo)

    CFO, Deputy GM & Executive Director

    • Tenure: 7.9yrs
    • Compensation: CN¥5.51m
  • Lifeng Yu (42yo)

    Deputy Chairman of Legal Representative & GM of Jinxi Limited

    • Pak Kan Lam (39yo)

      Financial Controller & Company Secretary


      Board Members

      • Francis Wong (54yo)

        Independent Non-Executive Director

        • Tenure: 15.4yrs
        • Compensation: CN¥685.00k
      • Jun Zhu (55yo)

        COO, Executive Deputy GM & Executive Director

        • Tenure: 16.1yrs
        • Compensation: CN¥8.07m
      • Hao Zhu (52yo)

        Executive Director

        • Tenure: 12.2yrs
        • Compensation: CN¥1.56m
      • Xiaoling Shen (58yo)

        Executive Director

        • Tenure: 14.5yrs
        • Compensation: CN¥4.64m
      • Jingyuan Han (62yo)

        Chairman & CEO

        • Tenure: 16.2yrs
        • Compensation: CN¥24.26m
      • Ondra Otradovec (50yo)

        Non-Executive Director

        • Tenure: 5yrs
        • Compensation: CN¥342.00k
      • Tianyi Wang (72yo)

        Independent Non-Executive Director

        • Tenure: 7.9yrs
        • Compensation: CN¥342.00k
      • Sanjay Sharma (47yo)

        Executive Director

        • Tenure: 0.3yrs
      • Li Han (32yo)

        CFO, Deputy GM & Executive Director

        • Tenure: 7.9yrs
        • Compensation: CN¥5.51m
      • Bing Wang (54yo)

        Independent Non-Executive Director

        • Tenure: 3.5yrs
        • Compensation: CN¥342.00k

      Company Information

      China Oriental Group Company Limited's company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: China Oriental Group Company Limited
      • Ticker: 581
      • Exchange: SEHK
      • Founded: 2003
      • Industry: Steel
      • Sector: Materials
      • Market Cap: HK$11.019b
      • Shares outstanding: 3.72b
      • Website: https://www.chinaorientalgroup.com

      Number of Employees


      Location

      • China Oriental Group Company Limited
      • Great Eagle Centre
      • 9th Floor
      • Wanchai
      • Hong Kong

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      CUGC.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDMar 2004
      581SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDMar 2004
      ORGDB (Deutsche Boerse AG)YesOrdinary SharesDEEURMar 2004
      581SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesOrdinary SharesHKHKDMar 2004
      581SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesOrdinary SharesHKHKDMar 2004
      CUGC.YOTCPK (Pink Sheets LLC)ADRUSUSDNov 2008

      Biography

      China Oriental Group Company Limited, an investment holding company, manufactures and sells iron and steel products for downstream steel manufacturers in the People’s Republic of China. The company operates in Iron and Steel, and Real Estate segments. It offers H-section steel products for use in non-residential construction and infrastructure projects as structural supports; strips and strip products; cold rolled sheets for use in manufacturing home electric appliances, hardware, pipes, etc.; galvanized sheets for the production of civil-purpose sheets; billets for use as substrate in downstream steel products; and rebars for use in residential and non-residential projects, as well as provides casting products. The company is also involved in the trading of steel products, and iron ore and related products; leasing and financial leasing; import and export of goods and technology; purchase and sale of ferrous metal and coke; development and sale of real estate properties; environmental protection engineering; and research and development of recycling and energy-saving technology, as well as other recycling business. In addition, it provides equipment maintenance, motor vehicle scrap and crush demolition solutions; publication, construction project management, wholesale and retail trade, asset management, logistics, commercial management, hotel and catering, cargo transit agency, investment and management, and engineering technical services; agency services for import/export; and loans, as well as offers architectural designing, sale, and installation services. The company was incorporated in 2003 and is based in Wanchai, Hong Kong. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/27 12:37
      End of Day Share Price2020/01/24 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.