Chinasoft International (SEHK:354) - Share price, News & Analysis

Q: What is the Fair Price of 354 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

354 (HK$8.17) is trading below our estimate of [[fair value]] (HK$34.09)

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

354 Stock Overview

Chinasoft International Limited, together with its subsidiaries, develops and provides information technology (IT) solutions, IT outsourcing, and training services.

Rewards

Trading at 76% below our estimate of its fair value

Earnings are forecast to grow 17.27% per year

Earnings grew by 19.1% over the past year

Risk Analysis

Shareholders have been diluted in the past year

Chinasoft International Competitors

Digital China Holdings

SEHK:861

HK$6.7b

Newlink Technology

SEHK:9600

HK$2.1b

Capinfo

SEHK:1075

HK$970.9m

Vixtel Technologies Holdings

SEHK:1782

HK$1.1b

Price History & Performance

Summary of all time highs, changes and price drops for Chinasoft International
Historical stock prices
Current Share Price	HK$8.17
52 Week High	HK$16.28
52 Week Low	HK$5.28
Beta	1.11
1 Month Change	19.10%
3 Month Change	16.88%
1 Year Change	-41.97%
3 Year Change	100.25%
5 Year Change	97.82%
Change since IPO	1,845.24%

Recent News & Updates

Jun 13

Chinasoft International (HKG:354) May Have Issues Allocating Its Capital

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for...

May 17

What Does Chinasoft International Limited's (HKG:354) Share Price Indicate?

While Chinasoft International Limited ( HKG:354 ) might not be the most widely known stock at the moment, it saw a...

Shareholder Returns

	354	HK IT	HK Market
7D	13.3%	4.3%	1.7%
1Y	-42.0%	-28.1%	-21.2%

Return vs Industry: 354 underperformed the Hong Kong IT industry which returned -28.1% over the past year.

Return vs Market: 354 underperformed the Hong Kong Market which returned -21.2% over the past year.

Price Volatility

Is 354's price volatile compared to industry and market?
354 volatility
354 Average Weekly Movement	8.2%
IT Industry Average Movement	6.8%
Market Average Movement	6.9%
10% most volatile stocks in HK Market	13.8%
10% least volatile stocks in HK Market	3.4%

Stable Share Price: 354 is not significantly more volatile than the rest of Hong Kong stocks over the past 3 months, typically moving +/- 8% a week.

Volatility Over Time: 354's weekly volatility (8%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2000	92,039	Henry Chen	https://www.chinasofti.com

Chinasoft International Limited, together with its subsidiaries, develops and provides information technology (IT) solutions, IT outsourcing, and training services. It operates through Technical Professional Services Group and Internet IT Services Group segments. The company offers CloudEasy, a cloud management platform; Huaxia Cloud, a cloud brokerage platform; Tencent Cloud that provides cloud consultation, migration, operation and maintenance management, and application development and integration; enterprise cloud disk; and cloud shop O2O platform.

Chinasoft International Fundamentals Summary

How do Chinasoft International's earnings and revenue compare to its market cap?
354 fundamental statistics
Market Cap	CN¥20.22b
Earnings (TTM)	CN¥1.14b
Revenue (TTM)	CN¥18.40b

17.8x

P/E Ratio

1.1x

P/S Ratio

Is 354 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
354 income statement (TTM)
Revenue	CN¥18.40b
Cost of Revenue	CN¥13.49b
Gross Profit	CN¥4.90b
Other Expenses	CN¥3.77b
Earnings	CN¥1.14b

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	0.39
Gross Margin	26.66%
Net Profit Margin	6.18%
Debt/Equity Ratio	16.7%

How did 354 perform over the long term?

See historical performance and comparison

Dividends

0.4%

Current Dividend Yield

6%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is 354 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 354?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 354. This is calculated by dividing 354's market cap by their current preferred multiple.
What is 354's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CN¥20.22b

354 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	0.9x
Enterprise Value/EBITDA	17x
PEG Ratio	1x

Price to Earnings Ratio vs Peers

How does 354's PE Ratio compare to its peers?

354 PE Ratio vs Peers

The above table shows the PE ratio for 354 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	114.8x
861 Digital China Holdings	9.4x	25.6%	HK$6.7b
9600 Newlink Technology	138.9x	n/a	HK$2.1b
1075 Capinfo	45.1x	n/a	HK$970.9m
1782 Vixtel Technologies Holdings	265.9x	n/a	HK$1.1b
354 Chinasoft International	17.8x	17.3%	HK$23.7b

Forward PE

Price-To-Earnings vs Peers: 354 is good value based on its Price-To-Earnings Ratio (17.8x) compared to the peer average (114.8x).

Price to Earnings Ratio vs Industry

How does 354's PE Ratio compare vs other companies in the HK IT Industry?

Price-To-Earnings vs Industry: 354 is expensive based on its Price-To-Earnings Ratio (17.8x) compared to the Hong Kong IT industry average (11.5x)

Price to Earnings Ratio vs Fair Ratio

What is 354'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.

354 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	17.8x
Fair PE Ratio	22.8x

Price-To-Earnings vs Fair Ratio: 354 is good value based on its Price-To-Earnings Ratio (17.8x) compared to the estimated Fair Price-To-Earnings Ratio (22.8x).

Share Price vs Fair Value

What is the Fair Price of 354 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 354 (HK$8.17) is trading below our estimate of fair value (HK$34.09)

Significantly Below Fair Value: 354 is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: 354 is poor value based on its PEG Ratio (1x)

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Future Growth

How is Chinasoft International forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

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

17.3%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: 354's forecast earnings growth (17.3% per year) is above the savings rate (1.5%).

Earnings vs Market: 354's earnings (17.3% per year) are forecast to grow faster than the Hong Kong market (17.1% per year).

High Growth Earnings: 354's earnings are forecast to grow, but not significantly.

Revenue vs Market: 354's revenue (16.8% per year) is forecast to grow faster than the Hong Kong market (10.3% per year).

High Growth Revenue: 354's revenue (16.8% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: 354's Return on Equity is forecast to be low in 3 years time (13.1%).

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Past Performance

How has Chinasoft International performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

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

17.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 354 has high quality earnings.

Growing Profit Margin: 354's current net profit margins (6.2%) are lower than last year (6.8%).

Past Earnings Growth Analysis

Earnings Trend: 354's earnings have grown by 17.8% per year over the past 5 years.

Accelerating Growth: 354's earnings growth over the past year (19.1%) exceeds its 5-year average (17.8% per year).

Earnings vs Industry: 354 earnings growth over the past year (19.1%) exceeded the IT industry -4.1%.

Return on Equity

High ROE: 354's Return on Equity (9.8%) is considered low.

Discover strong past performing companies

Financial Health

How is Chinasoft International's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

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

Financial Position Analysis

Short Term Liabilities: 354's short term assets (CN¥13.5B) exceed its short term liabilities (CN¥4.0B).

Long Term Liabilities: 354's short term assets (CN¥13.5B) exceed its long term liabilities (CN¥1.3B).

Debt to Equity History and Analysis

Debt Level: 354 has more cash than its total debt.

Reducing Debt: 354's debt to equity ratio has reduced from 32.3% to 16.7% over the past 5 years.

Debt Coverage: 354's debt is well covered by operating cash flow (49.6%).

Interest Coverage: 354's interest payments on its debt are well covered by EBIT (49.4x coverage).

Balance Sheet

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Dividend

What is Chinasoft International current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

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

0.39%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: 354's dividend (0.39%) isn’t notable compared to the bottom 25% of dividend payers in the Hong Kong market (2.7%).

High Dividend: 354's dividend (0.39%) is low compared to the top 25% of dividend payers in the Hong Kong market (7.78%).

Stability and Growth of Payments

Stable Dividend: 354 is not paying a notable dividend for the Hong Kong market, therefore no need to check if payments are stable.

Growing Dividend: 354 is not paying a notable dividend for the Hong Kong market, therefore no need to check if payments are increasing.

Earnings Payout to Shareholders

Earnings Coverage: 354 is not paying a notable dividend for the Hong Kong market.

Cash Payout to Shareholders

Cash Flow Coverage: 354 is not paying a notable dividend for the Hong Kong market.

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Management

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

1.3yrs

Average management tenure

CEO

Henry Chen (58 yo)

no data

Tenure

CN¥24,238,000

Compensation

Dr. Yuhong Chen, also known as Henry, PhD serves as the Chief Executive Officer of Chinasoft International Limited. Dr. Chen is responsible for the overall business development. Dr. Chen served as Managing...

CEO Compensation Analysis

Compensation vs Market: Henry's total compensation ($USD3.62M) is above average for companies of similar size in the Hong Kong market ($USD361.02K).

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

Leadership Team

Experienced Management: 354's management team is not considered experienced ( 1.3 years average tenure), which suggests a new team.

Board Members

Experienced Board: 354's board of directors are seasoned and experienced ( 10.3 years average tenure).

Ownership

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

Insider Trading Volume

Insider Buying: 354 insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 6.3%.

Data	Last Updated (UTC time)
Company Analysis	2022/06/28 00:00
End of Day Share Price	2022/06/28 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31