SEHK:1806

Stock Analysis Report

Executive Summary

Huifu Payment Limited provides third-party payment services in Mainland China.

Rewards

Trading at 87.9% below its fair value

Earnings are forecast to grow 31.43% per year

Earnings grew by 59.6% over the past year

Risk Analysis

Shareholders have been diluted in the past year



Snowflake Analysis

Solid track record with high growth potential.

Share Price & News

How has Huifu Payment's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 1806 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-4.7%

1806

-0.4%

HK IT

3.5%

HK Market


1 Year Return

-9.3%

1806

-7.0%

HK IT

2.3%

HK Market

Return vs Industry: 1806 underperformed the Hong Kong IT industry which returned -7% over the past year.

Return vs Market: 1806 underperformed the Hong Kong Market which returned 2.3% over the past year.


Shareholder returns

1806IndustryMarket
7 Day-4.7%-0.4%3.5%
30 Day-7.5%3.7%3.1%
90 Day-5.3%3.2%1.1%
1 Year-9.3%-9.3%-5.4%-7.0%6.0%2.3%
3 Yearn/a-0.5%-5.3%25.4%12.7%
5 Yearn/a59.3%40.8%23.0%2.4%

Price Volatility Vs. Market

How volatile is Huifu Payment's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Huifu Payment undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 1806 (HK$2.84) is trading below our estimate of fair value (HK$23.45)

Significantly Below Fair Value: 1806 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 1806 is poor value based on its PE Ratio (13.4x) compared to the IT industry average (11.6x).

PE vs Market: 1806 is poor value based on its PE Ratio (13.4x) compared to the Hong Kong market (10.3x).


Price to Earnings Growth Ratio

PEG Ratio: 1806 is good value based on its PEG Ratio (0.4x)


Price to Book Ratio

PB vs Industry: 1806 is overvalued based on its PB Ratio (1.5x) compared to the HK IT industry average (1x).


Next Steps

Future Growth

How is Huifu Payment forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

31.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 1806's forecast earnings growth (31.4% per year) is above the savings rate (1.6%).

Earnings vs Market: 1806's earnings (31.4% per year) are forecast to grow faster than the Hong Kong market (11.7% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: 1806's revenue (31.4% per year) is forecast to grow faster than the Hong Kong market (10.3% per year).

High Growth Revenue: 1806's revenue (31.4% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 1806's Return on Equity is forecast to be low in 3 years time (16.7%).


Next Steps

Past Performance

How has Huifu Payment performed over the past 5 years?

38.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 1806 has high quality earnings.

Growing Profit Margin: 1806's current net profit margins (6.4%) are higher than last year (6%).


Past Earnings Growth Analysis

Earnings Trend: 1806's earnings have grown significantly by 38.4% per year over the past 5 years.

Accelerating Growth: 1806's earnings growth over the past year (59.6%) exceeds its 5-year average (38.4% per year).

Earnings vs Industry: 1806 earnings growth over the past year (59.6%) exceeded the IT industry -8.6%.


Return on Equity

High ROE: 1806's Return on Equity (11.1%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Huifu Payment's financial position?


Financial Position Analysis

Short Term Liabilities: 1806's short term assets (CN¥22.6B) exceed its short term liabilities (CN¥21.2B).

Long Term Liabilities: 1806's short term assets (CN¥22.6B) exceed its long term liabilities (CN¥150.4M).


Debt to Equity History and Analysis

Debt Level: 1806's debt to equity ratio (16.7%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if 1806's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: 1806's debt is well covered by operating cash flow (198.3%).

Interest Coverage: 1806 earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: 1806 has a low level of unsold assets or inventory.

Debt Coverage by Assets: 1806's debt is covered by short term assets (assets are 63.9x debt).


Next Steps

Dividend

What is Huifu Payment's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%2.2%markettop25%6.2%industryaverage1.9%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate 1806's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate 1806's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if 1806's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if 1806's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of 1806's dividend in 3 years as they are not forecast to pay a notable one for the Hong Kong market.


Next Steps

Management

What is the CEO of Huifu Payment's salary, the management and board of directors tenure and is there insider trading?

1.8yrs

Average management tenure


CEO

Ye Zhou (52yo)

1.8yrs

Tenure

CN¥25,471,000

Compensation

Mr. Ye Zhou has been Chairman and Chief Executive Officer of Huifu Payment Limited since March 2018 and has been its Executive Director since December 21, 2017. Mr. Zhou is also the Chairman of the board o ...


CEO Compensation Analysis

Compensation vs Market: Ye's total compensation ($USD3.65M) is above average for companies of similar size in the Hong Kong market ($USD333.12K).

Compensation vs Earnings: Ye's compensation has increased by more than 20% in the past year.


Management Age and Tenure

1.8yrs

Average Tenure

47yo

Average Age

Experienced Management: 1806's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.


Board Age and Tenure

1.8yrs

Average Tenure

51yo

Average Age

Experienced Board: 1806's board of directors are not considered experienced ( 1.8 years average tenure), which suggests a new board.


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$8,743,57704 Dec 19
Wanzhi Co. Ltd
EntityCompany
Shares2,851,600
Max PriceHK$3.07
BuyHK$10,664,78928 Nov 19
Wanzhi Co. Ltd
EntityCompany
Shares3,266,800
Max PriceHK$3.26
SellHK$343,610,78131 Jan 19
FMR LLC
EntityCompany
Shares115,246,778
Max PriceHK$2.98

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 41.1%.


Management Team

  • Betty So

    Joint Company Secretary

    • Tenure: 1.6yrs
  • Ye Zhou (52yo)

    Chairman & CEO

    • Tenure: 1.8yrs
    • Compensation: CN¥25.47m
  • Haijie Mu (47yo)

    President & Executive Director

    • Tenure: 1.8yrs
    • Compensation: CN¥13.17m
  • Yuan Jin (44yo)

    CFO, Executive Director & Joint Company Secretary

    • Tenure: 1.8yrs
    • Compensation: CN¥6.45m

Board Members

  • Joe Zhou (57yo)

    Non Executive Director

    • Tenure: 1.8yrs
  • Lihong Wang (51yo)

    Non-Executive Director

    • Tenure: 0.08yrs
  • Hengzhong Wang (51yo)

    Independent Non-Executive Director

    • Tenure: 1.8yrs
    • Compensation: CN¥140.00k
  • Ye Zhou (52yo)

    Chairman & CEO

    • Tenure: 1.8yrs
    • Compensation: CN¥25.47m
  • Haijie Mu (47yo)

    President & Executive Director

    • Tenure: 1.8yrs
    • Compensation: CN¥13.17m
  • Yuan Jin (44yo)

    CFO, Executive Director & Joint Company Secretary

    • Tenure: 1.8yrs
    • Compensation: CN¥6.45m
  • Chia Chow Chye (47yo)

    Non-Executive Director

    • Tenure: 1.8yrs
  • Jun Liu (58yo)

    Independent Non-Executive Director

    • Tenure: 1.8yrs
    • Compensation: CN¥140.00k
  • Qi Zhang (59yo)

    Independent Non-Executive Director

    • Tenure: 1.8yrs
    • Compensation: CN¥140.00k

Company Information

Huifu Payment Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Huifu Payment Limited
  • Ticker: 1806
  • Exchange: SEHK
  • Founded: 2006
  • Industry: Data Processing and Outsourced Services
  • Sector: Software
  • Market Cap: HK$3.551b
  • Shares outstanding: 1.25b
  • Website: https://www.huifu.com

Number of Employees


Location

  • Huifu Payment Limited
  • Putian Industrial Park Phase II
  • Block C5
  • Shanghai
  • China

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
1806SEHK (The Stock Exchange of Hong Kong Ltd.)HKD0.0001HKHKDNo data
1806SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDJun 2018
1806SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesOrdinary SharesHKHKDJun 2018

Biography

Huifu Payment Limited provides third-party payment services in Mainland China. The company offers merchant payment services, such as POS, Internet payment, mobile payment, mobile POS, and cross-border paym ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/14 12:57
End of Day Share Price2019/12/13 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.