Is China Daye Non-Ferrous Metals Mining Limited (HKG:661) Excessively Paying Its CEO?

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In 2012 Zhong Sheng Long was appointed CEO of China Daye Non-Ferrous Metals Mining Limited (HKG:661). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for China Daye Non-Ferrous Metals Mining

How Does Zhong Sheng Long’s Compensation Compare With Similar Sized Companies?

Our data indicates that China Daye Non-Ferrous Metals Mining Limited is worth HK$1.1b, and total annual CEO compensation is CN¥2.0m. (This is based on the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at CN¥31k. We took a group of companies with market capitalizations below CN¥1.4b, and calculated the median CEO compensation to be CN¥1.4m.

As you can see, Zhong Sheng Long is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean China Daye Non-Ferrous Metals Mining Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at China Daye Non-Ferrous Metals Mining, below.

SEHK:661 CEO Compensation February 15th 19
SEHK:661 CEO Compensation February 15th 19

Is China Daye Non-Ferrous Metals Mining Limited Growing?

On average over the last three years, China Daye Non-Ferrous Metals Mining Limited has grown earnings per share (EPS) by 66% each year (using a line of best fit). In the last year, its revenue is down -21%.

This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has China Daye Non-Ferrous Metals Mining Limited Been A Good Investment?

Given the total loss of 57% over three years, many shareholders in China Daye Non-Ferrous Metals Mining Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We compared total CEO remuneration at China Daye Non-Ferrous Metals Mining Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. So you may want to check if insiders are buying China Daye Non-Ferrous Metals Mining shares with their own money (free access).

Important note: China Daye Non-Ferrous Metals Mining may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.