SEHK:777

Stock Analysis Report

NetDragon Websoft Holdings

Executive Summary

NetDragon Websoft Holdings Limited, an investment holding company, develops online and mobile games in the People’s Republic of China, the United States, and internationally.

Snowflake

Fundamentals

Excellent balance sheet with proven track record.


Similar Companies

Share Price & News

How has NetDragon Websoft Holdings's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

6.3%

777

-0.3%

HK Entertainment

3.1%

HK Market


1 Year Return

40.3%

777

1.4%

HK Entertainment

0.5%

HK Market

Return vs Industry: 777 exceeded the Hong Kong Entertainment industry which returned 1.4% over the past year.

Return vs Market: 777 exceeded the Hong Kong Market which returned 0.5% over the past year.


Shareholder returns

777IndustryMarket
7 Day6.3%-0.3%3.1%
30 Day0.5%-2.9%-1.8%
90 Day-0.2%-8.7%-4.8%
1 Year42.5%40.3%2.8%1.4%4.1%0.5%
3 Year-24.3%-26.8%-42.5%-44.2%15.8%4.2%
5 Year48.5%40.7%-31.7%-35.7%18.9%-0.9%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is NetDragon Websoft Holdings undervalued compared to its fair value and its price relative to the market?

36.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Undervalued: 777 (HK$19.02) is trading below our estimate of fair value (HK$29.92)

Significantly Undervalued: 777 is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: 777 is good value based on its PE Ratio (11.9x) compared to the Entertainment industry average (13.2x).

PE vs Market: 777 is poor value based on its PE Ratio (11.9x) compared to the Hong Kong market (10.3x).


Price to Earnings Growth Ratio

Low PEG Ratio: 777 is good value based on its PEG Ratio (0.8x)


Price to Book Ratio

PB vs Industry: 777 is overvalued based on its PB Ratio (1.7x) compared to the HK Entertainment industry average (1.1x).


Next Steps

Future Growth

How is NetDragon Websoft Holdings forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

14.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 777's forecast earnings growth (14.5% per year) is above the savings rate (2%).

Earnings vs Market: 777's earnings (14.5% per year) are forecast to grow faster than the Hong Kong market (11.3% per year).

High Growth Earnings: 777's earnings are forecast to grow, but not significantly.

Revenue vs Market: 777's revenue (15.8% per year) is forecast to grow faster than the Hong Kong market (10% per year).

High Growth Revenue: 777's revenue (15.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: 777's Return on Equity is forecast to be low in 3 years time (14.6%).


Next Steps

Past Performance

How has NetDragon Websoft Holdings performed over the past 5 years?

47.1%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: 777's earnings have grown significantly by 47.1% per year over the past 5 years.

Accelerating Growth: 777's earnings growth over the past year (396.9%) exceeds its 5-year average (47.1% per year).

Earnings vs Industry: 777 earnings growth over the past year (396.9%) exceeded the Entertainment industry -14.7%.


Return on Equity

High ROE: 777's Return on Equity (13.3%) is considered low.


Return on Assets

ROA vs Industry: 777 has a higher Return on Assets than the Entertainment industry average last year.


Return on Capital Employed

ROCE Improving: 777's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is NetDragon Websoft Holdings's financial position?


Financial Position Analysis

Short Term Liabilities: 777's short term assets (CN¥3.9B) exceeds its short term liabilities (CN¥1.9B)

Long Term Liabilities: 777's short term assets (3.9B) exceeds its long term liabilities (666.8M)


Debt to Equity History and Analysis

Debt Level: 777's debt to equity ratio (9.4%) is considered satisfactory

Reducing Debt: 777's debt to equity ratio has increased from 2.4% to 9.4% over the past 5 years.

Debt Coverage: 777's debt is well covered by operating cash flow (265%).

Interest Coverage: 777's interest payments on its debt are well covered by EBIT (1286x coverage).


Balance Sheet

Inventory Level: 777 has a high level of physical assets or inventory.

Debt Coverage by Assets: 777's debt is covered by short term assets (assets are 8.211940x debt).


Next Steps

Dividend

What is NetDragon Websoft Holdings's current dividend yield, its reliability and sustainability?

1.57%

Current Dividend Yield


Dividend Yield vs Market

company1.6%marketbottom25%2.3%markettop25%6.3%industryaverage3.6%forecastin3Years1.7%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: 777's dividend (1.57%) isn’t notable compared to the bottom 25% of dividend payers in the Hong Kong market (2.27%).

High Dividend: 777's dividend (1.57%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.25%).

Stable Dividend: 777's dividend payments have been volatile in the past 10 years.

Growing Dividend: 777's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (18.5%), 777's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 777's dividends in 3 years are forecast to be well covered by earnings (17.1% payout ratio).


Next Steps

Management

What is the CEO of NetDragon Websoft Holdings's salary, the management and board of directors tenure and is there insider trading?

6.0yrs

Average management tenure


CEO

Luyuan Liu (46yo)

0yrs

Tenure

CN¥810,000

Compensation

Mr. Luyuan Liu serves as the Chief Executive Officer and Compliance Officer of NetDragon WebSoft, Inc. Mr. Liu is mainly responsible for the overall management of the Group. Mr. Liu is responsible for the  ...


CEO Compensation Analysis

Compensation vs. Market: Luyuan's total compensation ($USD114.38K) is about average for companies of similar size in the Hong Kong market ($USD510.05K).

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


Management Age and Tenure

6.0yrs

Average Tenure

48yo

Average Age

Experienced Management: 777's management team is seasoned and experienced (6 years average tenure).


Board Age and Tenure

12.0yrs

Average Tenure

50yo

Average Age

Experienced Board: 777's board of directors are seasoned and experienced ( 12 years average tenure).


Insider Trading

Insider Buying: 777 insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellCN¥1,349,60009 Sep 19
Lim Leung
EntityIndividual
Role
Vice Chairman
Vice Chairman
Shares70,000
Max PriceCN¥19.28
SellCN¥2,611,18309 Sep 19
Lim Leung
EntityIndividual
Role
Vice Chairman
Vice Chairman
Shares134,500
Max PriceCN¥19.41
SellCN¥1,009,44904 Sep 19
Kwan Hung Lee
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares49,500
Max PriceCN¥20.39
SellCN¥491,94607 May 19
Kwan Hung Lee
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares21,000
Max PriceCN¥23.43
BuyCN¥459,83707 May 19
Kwan Hung Lee
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares21,000
Max PriceCN¥21.90
SellCN¥4,446,00017 Apr 19
Saikeung Liu
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares190,000
Max PriceCN¥23.40
SellCN¥1,567,80012 Apr 19
Saikeung Liu
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares67,000
Max PriceCN¥23.40
SellCN¥12,311,93609 Apr 19
Guowei Chao
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares545,500
Max PriceCN¥22.57
SellCN¥731,90109 Apr 19
Guowei Chao
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares34,000
Max PriceCN¥21.53
SellCN¥1,120,37217 Dec 18
Kwan Hung Lee
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares88,000
Max PriceCN¥12.73
SellCN¥598,61711 Dec 18
Kwan Hung Lee
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares45,000
Max PriceCN¥13.30
SellCN¥285,88225 Oct 18
Kwan Hung Lee
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares19,500
Max PriceCN¥14.66

Ownership Breakdown


Management Team

  • Dejian Liu (48yo)

    Founder & Executive Chairman

    • Tenure: 0yrs
    • Compensation: CN¥803.00k
  • Benjamin Yam (43yo)

    CFO & Senior VP

    • Tenure: 6yrs
  • Luyuan Liu (46yo)

    CEO, Compliance Officer & Executive Director

    • Tenure: 0yrs
    • Compensation: CN¥810.00k
  • Hui Zheng (50yo)

    Executive Director & Senior VP

    • Tenure: 0yrs
    • Compensation: CN¥502.00k
  • Hongzhan Chen (46yo)

    CTO, Senior VP & Executive Director

    • Tenure: 0yrs
    • Compensation: CN¥729.00k
  • Simon Leung (64yo)

    Vice Chairman

    • Tenure: 4.3yrs
    • Compensation: CN¥17.53m
  • Wood Kin (41yo)

    Head of Compliance & Corporate Affairs

    • Tenure: 5.7yrs
  • Maggie Zhou

    Senior Director of Investor Relations

    • Tenure: 0yrs
  • Peter Lin (48yo)

    Chief Designer & VP

    • Tenure: 0yrs
  • Biao Yu (49yo)

    Senior Vice President

    • Tenure: 0yrs

Board Members

  • Dongliang Lin (57yo)

    Non-Executive Director

    • Tenure: 12yrs
  • Charles Chao (53yo)

    Independent Non-Executive Director

    • Tenure: 12yrs
    • Compensation: CN¥1.00m
  • Eddie Lee (54yo)

    Independent Non-Executive Director

    • Tenure: 12yrs
    • Compensation: CN¥1.00m
  • Dejian Liu (48yo)

    Founder & Executive Chairman

    • Tenure: 0yrs
    • Compensation: CN¥803.00k
  • Luyuan Liu (46yo)

    CEO, Compliance Officer & Executive Director

    • Tenure: 0yrs
    • Compensation: CN¥810.00k
  • Hui Zheng (50yo)

    Executive Director & Senior VP

    • Tenure: 0yrs
    • Compensation: CN¥502.00k
  • Hongzhan Chen (46yo)

    CTO, Senior VP & Executive Director

    • Tenure: 0yrs
    • Compensation: CN¥729.00k
  • Thomas Liu (46yo)

    Independent Non-Executive Director

    • Tenure: 12yrs
    • Compensation: CN¥1.00m
  • Simon Leung (64yo)

    Vice Chairman

    • Tenure: 4.3yrs
    • Compensation: CN¥17.53m

Company Information

NetDragon Websoft Holdings Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: NetDragon Websoft Holdings Limited
  • Ticker: 777
  • Exchange: SEHK
  • Founded: 1999
  • Industry: Interactive Home Entertainment
  • Sector: Media
  • Market Cap: HK$10.079b
  • Shares outstanding: 529.34m
  • Website: https://www.netdragon.com

Number of Employees


Location

  • NetDragon Websoft Holdings Limited
  • Building 851
  • 58 Hot Spring Branch Road
  • Fuzhou
  • Fujian Province
  • 350001
  • China

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
777SEHK (The Stock Exchange of Hong Kong Ltd.)YesCommon SharesHKHKDNov 2007
3NDDB (Deutsche Boerse AG)YesCommon SharesDEEURNov 2007
777SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesCommon SharesHKHKDNov 2007
777SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesCommon SharesHKHKDNov 2007

Biography

NetDragon Websoft Holdings Limited, an investment holding company, develops online and mobile games in the People’s Republic of China, the United States, and internationally. It engages in the games design ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/16 12:42
End of Day Share Price2019/10/16 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.