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 Analysis

Good value with reasonable growth potential.


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

Stable Share Price: 861's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

0.9%

861

7.1%

HK IT

2.7%

HK Market


1 Year Return

-15.4%

861

-26.7%

HK IT

-19.8%

HK Market

Return vs Industry: 861 exceeded the Hong Kong IT industry which returned -26.7% over the past year.

Return vs Market: 861 exceeded the Hong Kong Market which returned -19.8% over the past year.


Shareholder returns

861IndustryMarket
7 Day0.9%7.1%2.7%
30 Day-9.4%-8.7%-7.2%
90 Day-17.2%-13.8%-12.1%
1 Year-14.8%-15.4%-25.3%-26.7%-16.9%-19.8%
3 Year-45.2%-48.1%-26.9%-30.3%0.9%-9.3%
5 Year-45.0%-65.3%-16.1%-24.9%-12.6%-26.7%

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?

37.5%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 861 (HK$3.46) is trading below our estimate of fair value (HK$5.54)

Significantly Below Fair Value: 861 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 861 is poor value based on its PE Ratio (18.9x) compared to the IT industry average (13.1x).

PE vs Market: 861 is poor value based on its PE Ratio (18.9x) compared to the Hong Kong market (9.5x).


Price to Earnings Growth Ratio

PEG Ratio: 861 is good value based on its PEG Ratio (0.7x)


Price to Book Ratio

PB vs Industry: 861 is good value based on its PB Ratio (0.6x) compared to the HK IT industry average (0.9x).


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?

26.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 861's forecast earnings growth (26.7% per year) is above the savings rate (1.6%).

Earnings vs Market: 861's earnings (26.7% per year) are forecast to grow faster than the Hong Kong market (11.8% per year).

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

Revenue vs Market: 861's revenue (14.7% per year) is forecast to grow faster than the Hong Kong market (9.8% per year).

High Growth Revenue: 861's revenue (14.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 861's Return on Equity is forecast to be low in 3 years time (6.1%).


Next Steps

Past Performance

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

-18.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 861 has a large one-off gain of HK$212.7M impacting its December 31 2019 financial results.

Growing Profit Margin: 861's current net profit margins (1.7%) are higher than last year (1%).


Past Earnings Growth Analysis

Earnings Trend: 861's earnings have declined by -18.4% per year over the past 5 years.

Accelerating Growth: 861's earnings growth over the past year (101.8%) exceeds its 5-year average (-18.4% per year).

Earnings vs Industry: 861 earnings growth over the past year (101.8%) exceeded the IT industry 5.5%.


Return on Equity

High ROE: 861's Return on Equity (3.6%) is considered low.


Next Steps

Financial Health

How is Digital China Holdings's financial position?


Financial Position Analysis

Short Term Liabilities: 861's short term assets (HK$12.8B) exceed its short term liabilities (HK$10.9B).

Long Term Liabilities: 861's short term assets (HK$12.8B) exceed its long term liabilities (HK$2.1B).


Debt to Equity History and Analysis

Debt Level: 861's debt to equity ratio (40.6%) is considered high.

Reducing Debt: 861's debt to equity ratio has reduced from 74.8% to 40.6% over the past 5 years.

Debt Coverage: 861's debt is not well covered by operating cash flow (14%).

Interest Coverage: 861's interest payments on its debt are not well covered by EBIT (2.7x coverage).


Balance Sheet


Next Steps

Dividend

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

1.85%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: 861's dividend (1.85%) isn’t notable compared to the bottom 25% of dividend payers in the Hong Kong market (2.66%).

High Dividend: 861's dividend (1.85%) is low compared to the top 25% of dividend payers in the Hong Kong market (7.15%).


Stability and Growth of Payments

Stable Dividend: 861's dividend payments have been volatile in the past 10 years.

Growing Dividend: 861's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (35%), 861's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 861's dividends in 3 years are forecast to be well covered by earnings (45% payout ratio).


Next Steps

Management

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

5.9yrs

Average board tenure


CEO

Wei Guo (56yo)

1.83s

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's total compensation ($USD223.17K) is below average for companies of similar size in the Hong Kong market ($USD491.81K).

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


Board Members

NamePositionTenureCompensationOwnership
Wei Guo
Chairman & CEO1.83yrsHK$1.73m10.84% HK$633.9m
Man Chung Wong
Independent Non-Executive Director13.67yrsHK$300.00kno data
Yang Lin
Vice Chairman1.83yrsHK$3.99m0.21% HK$12.5m
Hong Ni
Independent Non-Executive Director9.58yrsHK$300.00kno data
Xiaoyan Yan
Independent Non-Executive Director5.92yrsno datano data
Yun Liu
Independent Non-Executive Director6.08yrsHK$300.00kno data
Jing Peng
Non-Executive Director2.33yrsno datano data
Ziping Yu
Non-Executive Director2.33yrsno datano data
William King
Independent Non-Executive Director1.83yrsHK$150.00kno data

5.9yrs

Average Tenure

53yo

Average Age

Experienced Board: 861's board of directors are considered experienced (5.9 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.


Top Shareholders

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$5.850b
  • Shares outstanding: 1.67b
  • Website: https://www.dcholdings.com

Number of Employees


Location

  • Digital China Holdings Limited
  • Fortis Tower
  • 31st Floor
  • Wanchai
  • 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 Chain Business, Sm@rt City Business, and Other Business. It provides system development, maintenance, industry cloud, and infrastructure development services for the banking industry; and technical, application software development, and industry cloud construction and operation services for government, enterprises, and agriculture clients. The company also provides IT logistics services; and builds an urban-level big data platform for the city to solve medical, transportation, energy supply, and social security issues. In addition, it provides financial services, such as financing, leasing, guarantee, etc. to internal and external customers; and engages in assets operations, other businesses, and incubation and strategic investments. Further, the company develops and constructs science and technology park; engages in data integration and management software sales businesses; and provision of systems integration and network optimization services. Additionally, it offers maintenance and outsourcing, consultancy, and training services; and sell financial specialized equipment and surveying service software. Digital China Holdings Limited was founded in 2000 and is headquartered in Wanchai, Hong Kong. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/08 12:42
End of Day Share Price2020/04/08 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


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.