Should You Worry About Hong Wei (Asia) Holdings Company Limited’s (HKG:8191) CEO Salary Level?

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The CEO of Hong Wei (Asia) Holdings Company Limited (HKG:8191) is Cheung Lok Wong. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Hong Wei (Asia) Holdings

How Does Cheung Lok Wong’s Compensation Compare With Similar Sized Companies?

According to our data, Hong Wei (Asia) Holdings Company Limited has a market capitalization of HK$130m, and pays its CEO total annual compensation worth HK$1.2m. (This figure is for the year to December 2018). That’s a notable increase of 140% on last year. While we always look at total compensation first, we note that the salary component is less, at HK$115k. We took a group of companies with market capitalizations below HK$1.6b, and calculated the median CEO total compensation to be HK$1.7m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it’s important we delve into the performance of the actual business.

You can see a visual representation of the CEO compensation at Hong Wei (Asia) Holdings, below.

SEHK:8191 CEO Compensation, June 20th 2019
SEHK:8191 CEO Compensation, June 20th 2019

Is Hong Wei (Asia) Holdings Company Limited Growing?

On average over the last three years, Hong Wei (Asia) Holdings Company Limited has shrunk earnings per share by 61% each year (measured with a line of best fit). It saw its revenue drop -25% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don’t have analyst forecasts, you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Hong Wei (Asia) Holdings Company Limited Been A Good Investment?

Since shareholders would have lost about 63% over three years, some Hong Wei (Asia) Holdings Company Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

It looks like Hong Wei (Asia) Holdings Company Limited pays its CEO less than similar sized companies.

The compensation paid to Cheung Lok Wong is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). This contrasts with the growth in CEO remuneration, albeit off a reasonably low base. Considering all these factors, we’d stop short of saying the CEO pay is too high, but we don’t think shareholders would want to see a pay rise before business performance improves. Shareholders may want to check for free if Hong Wei (Asia) Holdings insiders are buying or selling shares.

If you want to buy a stock that is better than Hong Wei (Asia) Holdings, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.