SEHK:861

Stock Analysis Report

Digital China Holdings

Executive Summary

Digital China Holdings Limited, an investment holding company, provides information technology (IT) services primarily in Mainland China.

Snowflake

Fundamentals

Reasonable growth potential with mediocre balance sheet.


Similar Companies

Share Price & News

How has Digital China 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%

861

-0.4%

HK IT

0.9%

HK Market


1 Year Return

5.6%

861

-1.4%

HK IT

0.6%

HK Market

Return vs Industry: 861 exceeded the Hong Kong IT industry which returned -1.4% over the past year.

Return vs Market: 861 exceeded the Hong Kong Market which returned 0.6% over the past year.


Shareholder returns

861IndustryMarket
7 Day-6.3%-0.4%0.9%
30 Day-3.3%-0.7%0.4%
90 Day-6.1%-6.0%-5.5%
1 Year6.4%5.6%0.3%-1.4%4.2%0.6%
3 Year-41.1%-44.3%-13.2%-17.4%15.5%3.9%
5 Year-6.8%-41.3%37.9%22.5%19.9%-0.1%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Digital China Holdings undervalued compared to its fair value and its price relative to the market?

27.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Undervalued: 861 (HK$4.15) is trading below our estimate of fair value (HK$5.76)

Significantly Undervalued: 861 is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: 861 is poor value based on its PE Ratio (609.9x) compared to the IT industry average (11.2x).

PE vs Market: 861 is poor value based on its PE Ratio (609.9x) compared to the Hong Kong market (10.3x).


Price to Earnings Growth Ratio

Low PEG Ratio: 861 is poor value based on its PEG Ratio (8x)


Price to Book Ratio

PB vs Industry: 861 is good value based on its PB Ratio (0.8x) compared to the HK IT industry average (1x).


Next Steps

Future Growth

How is Digital China Holdings forecast to perform in the next 1 to 3 years based on estimates from 1 analyst?

76.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 861's forecast earnings growth (76% per year) is above the savings rate (2%).

Earnings vs Market: 861's earnings (76% per year) are forecast to grow faster than the Hong Kong market (11.4% per year).

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

Revenue vs Market: 861's revenue (15.9% per year) is forecast to grow faster than the Hong Kong market (10.2% per year).

High Growth Revenue: 861's revenue (15.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: 861's Return on Equity is forecast to be low in 3 years time (5.2%).


Next Steps

Past Performance

How has Digital China Holdings performed over the past 5 years?

-15.5%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: 861 has become profitable over the past 5 years, growing earnings by -15.5% per year.

Accelerating Growth: 861's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 861 had negative earnings growth (-93.6%) over the past year, making it difficult to compare to the IT industry average (-3.7%).


Return on Equity

High ROE: 861's Return on Equity (-0.1%) is considered low.


Return on Assets

ROA vs Industry: 861's Return on Assets is below or equal to the IT industry average last year.


Return on Capital Employed

ROCE Improving: 861's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is Digital China Holdings's financial position?


Financial Position Analysis

Short Term Liabilities: 861's short term assets (HK$11.8B) exceeds its short term liabilities (HK$9.9B)

Long Term Liabilities: 861's short term assets (11.8B) exceeds its long term liabilities (2.8B)


Debt to Equity History and Analysis

Debt Level: 861's debt to equity ratio (45.9%) is considered high

Reducing Debt: 861's debt to equity ratio has reduced from 81.1% to 45.9% over the past 5 years.

Debt Coverage: 861's debt is not well covered by operating cash flow (12.4%).

Interest Coverage: 861's interest payments on its debt are not well covered by EBIT (1.5x coverage).


Balance Sheet

Inventory Level: 861 has a low level of unsold assets or inventory.

Debt Coverage by Assets: 861's debt is covered by short term assets (assets are 2.065690x debt).


Next Steps

Dividend

What is Digital China Holdings's current dividend yield, its reliability and sustainability?

0.75%

Current Dividend Yield


Dividend Yield vs Market

company0.7%marketbottom25%2.3%markettop25%6.3%industryaverage2.0%forecastin3Years1.3%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: 861's dividend (0.75%) isn’t notable compared to the bottom 25% of dividend payers in the Hong Kong market (2.26%).

High Dividend: 861's dividend (0.75%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.25%).

Stable Dividend: 861 is not paying a notable dividend for the Hong Kong market, therefore no need to check if payments are stable.

Growing Dividend: 861 is not paying a notable dividend for the Hong Kong market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: 861 is not paying a notable dividend for the Hong Kong market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of 861'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 Digital China Holdings's salary, the management and board of directors tenure and is there insider trading?

5.4yrs

Average board tenure


CEO

Wei Guo (56yo)

1.3yrs

Tenure

HK$1,730,000

Compensation

Mr. Guo Wei has been the Chairman of Digital China Holdings Limited since December 19, 2007 and has been its Chief Executive Officer since June 8, 2018. Mr. Guo has been the Chairman and Acting President o ...


CEO Compensation Analysis

Compensation vs. Market: Wei has recently become CEO, making it difficult to compare their total compensation against companies of similar size in the Hong Kong market.

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


Board Age and Tenure

5.4yrs

Average Tenure

53yo

Average Age

Experienced Board: 861's board of directors are considered experienced (5.4 years average tenure).


Insider Trading

Insider Buying: 861 insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellHK$224,999,86426 Sep 19
Chi Yu Yip
EntityIndividual
Shares54,216,867
Max PriceHK$4.15
BuyHK$3,005,27706 Sep 19
Guangzhou City Construction Jiazi Investment Partnership Enterprise (Limited Partnership)
EntityCompany
Shares720,000
Max PriceHK$4.17
BuyHK$10,137,58109 Jul 19
GRG Banking Equipment Co.,Ltd.
EntityCompany
Shares2,230,000
Max PriceHK$4.55
BuyHK$8,674,13818 Jun 19
GRG Banking Equipment Co.,Ltd.
EntityCompany
Shares2,021,000
Max PriceHK$4.29
SellHK$4,619,57718 Jun 19
Allianz Asset Management AG
EntityCompany
Shares1,077,000
Max PriceHK$4.29

Ownership Breakdown


Management Team

  • Wei Guo (56yo)

    Chairman & CEO

    • Tenure: 1.3yrs
    • Compensation: HK$1.73m
  • Yun Xie (55yo)

    Chief Technology Officer

    • Tenure: 0yrs
  • Shengrui Liu (54yo)

    Chief Executive Officer of Digital China Financial Software Ltd.

    • Tenure: 0yrs
  • Yan Li (46yo)

    Head of Corporate Planning

    • Tenure: 0yrs
  • Weijun Fei (54yo)

    Regional Head of Northern China and Assistant President

    • Tenure: 0yrs
  • Davin Wu

    Director of Investment

    • Tenure: 0yrs
  • Jing Zhang (40yo)

    Assistant President and President of Southern China Business

    • Tenure: 0yrs
  • Chi Wong (52yo)

    Company Secretary

    • Tenure: 18.7yrs

Board Members

  • Wei Guo (56yo)

    Chairman & CEO

    • Tenure: 1.3yrs
    • Compensation: HK$1.73m
  • Francis Wong (54yo)

    Independent Non-Executive Director

    • Tenure: 13.2yrs
    • Compensation: HK$300.00k
  • Yang Lin (53yo)

    Vice Chairman

    • Tenure: 1.3yrs
    • Compensation: HK$3.99m
  • Hope Ni (47yo)

    Independent Non-Executive Director

    • Tenure: 9.1yrs
    • Compensation: HK$300.00k
  • Xiaoyan Yan (68yo)

    Independent Non-Executive Director

    • Tenure: 5.4yrs
  • John Liu (55yo)

    Independent Non-Executive Director

    • Tenure: 5.6yrs
    • Compensation: HK$300.00k
  • Jing Peng (32yo)

    Non-Executive Director

    • Tenure: 1.8yrs
  • Ziping Yu (47yo)

    Non-Executive Director

    • Tenure: 1.8yrs
  • William King (53yo)

    Independent Non-Executive Director

    • Tenure: 1.3yrs
    • Compensation: HK$150.00k

Company Information

Digital China Holdings Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Digital China Holdings Limited
  • Ticker: 861
  • Exchange: SEHK
  • Founded: 2000
  • Industry: IT Consulting and Other Services
  • Sector: Software
  • Market Cap: HK$6.935b
  • Shares outstanding: 1.67b
  • Website: https://www.dcholdings.com

Number of Employees


Location

  • Digital China Holdings Limited
  • Devon House
  • Suite 2008, 20th Floor
  • Quarry Bay
  • Hong Kong

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
DCHI.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJun 2001
861SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDJun 2001
DINDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJun 2001
861SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesOrdinary SharesHKHKDJun 2001
861SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesOrdinary SharesHKHKDJun 2001
910861TSEC (Taiwan Stock Exchange)TDR EACH REPR 0.5 SHSTWTWDNov 2010
DCHI.YOTCPK (Pink Sheets LLC)UNSPONSORED ADRUSUSDJun 2012

Biography

Digital China Holdings Limited, an investment holding company, provides information technology (IT) services primarily in Mainland China. The company operates through four segments: DCITS, Smart Industry C ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/19 12:40
End of Day Share Price2019/10/18 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.