Fortune Real Estate Investment Trust (SEHK:778) - Share price, News & Analysis

778 fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	0/6
Past Performance	1/6
Financial Health	3/6
Dividends	5/6

778 Stock Overview

Established in 2003, Fortune REIT is a real estate investment trust constituted by a trust deed (as amended, supplemented or otherwise modified from time to time).

Rewards

Trading at 47.6% below our estimate of its fair value

Became profitable this year

Pays a reliable dividend of 6.97%

Risk Analysis

Earnings are forecast to decline by an average of 21.8% per year for the next 3 years

Large one-off items impacting financial results

Fortune Real Estate Investment Trust Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Fortune Real Estate Investment Trust
Historical stock prices
Current Share Price	HK$6.43
52 Week High	HK$8.88
52 Week Low	HK$6.33
Beta	0.66
1 Month Change	-6.68%
3 Month Change	-9.18%
1 Year Change	-22.99%
3 Year Change	-40.13%
5 Year Change	-33.64%
Change since IPO	67.45%

Shareholder Returns

	778	HK REITs	HK Market
7D	0.2%	1.0%	2.1%
1Y	-23.0%	-20.4%	-23.3%

Return vs Industry: 778 underperformed the Hong Kong REITs industry which returned -21.2% over the past year.

Return vs Market: 778 matched the Hong Kong Market which returned -23.3% over the past year.

Price Volatility

Is 778's price volatile compared to industry and market?
778 volatility
778 Average Weekly Movement	1.8%
REITs Industry Average Movement	2.6%
Market Average Movement	7.0%
10% most volatile stocks in HK Market	13.8%
10% least volatile stocks in HK Market	3.3%

Stable Share Price: 778 is less volatile than 75% of Hong Kong stocks over the past 3 months, typically moving +/- 2% a week.

Volatility Over Time: 778's weekly volatility (2%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2003	n/a	Justina Chiu	https://www.fortunereit.com/html/index.php

Established in 2003, Fortune REIT is a real estate investment trust constituted by a trust deed (as amended, supplemented or otherwise modified from time to time). It is the first REIT to hold assets in Hong Kong and is currently listed on the Main Board of The Stock Exchange of Hong Kong Limited. Fortune REIT currently holds a portfolio of 16 private housing estate retail properties in Hong Kong, comprising of 3 million sq.

Fortune Real Estate Investment Trust Fundamentals Summary

How do Fortune Real Estate Investment Trust's earnings and revenue compare to its market cap?
778 fundamental statistics
Market Cap	HK$12.72b
Earnings (TTM)	HK$1.32b
Revenue (TTM)	HK$1.81b

9.7x

P/E Ratio

7.0x

P/S Ratio

Is 778 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
778 income statement (TTM)
Revenue	HK$1.81b
Cost of Revenue	HK$560.93m
Gross Profit	HK$1.25b
Other Expenses	-HK$72.04m
Earnings	HK$1.32b

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	0.67
Gross Margin	68.95%
Net Profit Margin	72.94%
Debt/Equity Ratio	30.5%

How did 778 perform over the long term?

See historical performance and comparison

Dividends

7.0%

Current Dividend Yield

89%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is 778 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 778?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 778. This is calculated by dividing 778's market cap by their current preferred multiple.
What is 778's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	HK$12.72b

778 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	11.9x
Enterprise Value/EBITDA	n/a
PEG Ratio	-0.4x

Price to Earnings Ratio vs Peers

How does 778's PE Ratio compare to its peers?

778 PE Ratio vs Peers

The above table shows the PE ratio for 778 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	19.2x

Forward PE

Price-To-Earnings vs Peers: 778 is good value based on its Price-To-Earnings Ratio (9.7x) compared to the peer average (19.2x).

Price to Earnings Ratio vs Industry

How does 778's PE Ratio compare vs other companies in the REITs Industry?

Price-To-Earnings vs Industry: 778 is good value based on its Price-To-Earnings Ratio (9.7x) compared to the Hong Kong REITs industry average (9.7x)

Price to Earnings Ratio vs Fair Ratio

What is 778's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

778 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	9.7x
Fair PE Ratio	4.1x

Price-To-Earnings vs Fair Ratio: 778 is expensive based on its Price-To-Earnings Ratio (9.7x) compared to the estimated Fair Price-To-Earnings Ratio (4.1x).

Share Price vs Fair Value

What is the Fair Price of 778 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 778 (HK$6.43) is trading below our estimate of fair value (HK$12.27)

Significantly Below Fair Value: 778 is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: 778's earnings are forecast to decline next year, so we can't calculate its PEG ratio.

Discover undervalued companies

Future Growth

How is Fortune Real Estate Investment Trust forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-21.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: 778's earnings are forecast to decline over the next 3 years (-21.8% per year).

Earnings vs Market: 778's earnings are forecast to decline over the next 3 years (-21.8% per year).

High Growth Earnings: 778's earnings are forecast to decline over the next 3 years.

Revenue vs Market: 778's revenue (0.6% per year) is forecast to grow slower than the Hong Kong market (10.1% per year).

High Growth Revenue: 778's revenue (0.6% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: 778's Return on Equity is forecast to be low in 3 years time (3%).

Discover growth companies

Past Performance

How has Fortune Real Estate Investment Trust performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-39.6%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 778 has a large one-off gain of HK$358.0M impacting its December 31 2021 financial results.

Growing Profit Margin: 778 became profitable in the past.

Past Earnings Growth Analysis

Earnings Trend: 778's earnings have declined by 39.6% per year over the past 5 years.

Accelerating Growth: 778 has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: 778 has become profitable in the last year, making it difficult to compare its past year earnings growth to the REITs industry (12.6%).

Return on Equity

High ROE: 778's Return on Equity (4.5%) is considered low.

Discover strong past performing companies

Financial Health

How is Fortune Real Estate Investment Trust's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: 778's short term assets (HK$203.7M) do not cover its short term liabilities (HK$2.7B).

Long Term Liabilities: 778's short term assets (HK$203.7M) do not cover its long term liabilities (HK$7.9B).

Debt to Equity History and Analysis

Debt Level: 778's net debt to equity ratio (30.1%) is considered satisfactory.

Reducing Debt: 778's debt to equity ratio has reduced from 44.2% to 30.5% over the past 5 years.

Debt Coverage: 778's debt is not well covered by operating cash flow (12.3%).

Interest Coverage: 778's interest payments on its debt are well covered by EBIT (6.3x coverage).

Balance Sheet

Discover healthy companies

Dividend

What is Fortune Real Estate Investment Trust current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

6.97%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: 778's dividend (6.97%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.76%).

High Dividend: 778's dividend (6.97%) is low compared to the top 25% of dividend payers in the Hong Kong market (7.89%).

Stability and Growth of Payments

Stable Dividend: 778's dividends per share have been stable in the past 10 years.

Growing Dividend: 778's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: At its current payout ratio (89.1%), 778's payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: At its current cash payout ratio (81.3%), 778's dividend payments are covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

7.0yrs

Average board tenure

CEO

Justina Chiu (40 yo)

7.33yrs

Tenure

Ms. Yu Chiu, also known as Justina, CFA, has been the Chief Executive Officer at ARA Asset Management Limited, a manager of Fortune Real Estate Investment Trust since February 3, 2015. Ms. Chiu serves as a...

Board Members

Experienced Board: 778's board of directors are considered experienced (7 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/24 00:00
End of Day Share Price	2022/06/24 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31