SEHK:303

Stock Analysis Report

Executive Summary

Vtech Holdings Limited designs, manufactures, and distributes consumer electronic products in North America, Europe, the Asia Pacific, and internationally.

Rewards

Trading at 26.4% below its fair value

Earnings grew by 3.3% over the past year

Risk Analysis

Unstable dividend track record



Snowflake Analysis

Flawless balance sheet with proven track record and pays a dividend.


Similar Companies

Share Price & News

How has Vtech Holdings's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 303 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.4%

303

2.4%

HK Communications

0.5%

HK Market


1 Year Return

5.5%

303

-3.0%

HK Communications

-0.2%

HK Market

Return vs Industry: 303 exceeded the Hong Kong Communications industry which returned -3% over the past year.

Return vs Market: 303 exceeded the Hong Kong Market which returned -0.2% over the past year.


Shareholder returns

303IndustryMarket
7 Day1.4%2.4%0.5%
30 Day6.8%-1.6%-3.8%
90 Day6.8%3.8%-1.3%
1 Year13.6%5.5%-0.6%-3.0%3.4%-0.2%
3 Year-6.7%-23.3%13.8%4.6%18.8%6.7%
5 Year-8.3%-31.7%4.1%-10.7%19.5%-0.5%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

26.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: 303 (HK$74.2) is trading below our estimate of fair value (HK$100.76)

Significantly Below Fair Value: 303 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: 303 is good value based on its PE Ratio (12x) compared to the Communications industry average (13.3x).

PE vs Market: 303 is poor value based on its PE Ratio (12x) compared to the Hong Kong market (10.2x).


Price to Earnings Growth Ratio

PEG Ratio: 303 is poor value based on its PEG Ratio (33.9x)


Price to Book Ratio

PB vs Industry: 303 is overvalued based on its PB Ratio (4.2x) compared to the HK Communications industry average (1x).


Next Steps

Future Growth

How is Vtech Holdings forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

0.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 303's forecast earnings growth (0.4% per year) is below the savings rate (1.6%).

Earnings vs Market: 303's earnings (0.4% per year) are forecast to grow slower than the Hong Kong market (11.9% per year).

High Growth Earnings: 303's earnings are forecast to grow, but not significantly.

Revenue vs Market: 303's revenue (2.4% per year) is forecast to grow slower than the Hong Kong market (9.8% per year).

High Growth Revenue: 303's revenue (2.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 303's Return on Equity is forecast to be high in 3 years time (31.6%)


Next Steps

Past Performance

How has Vtech Holdings performed over the past 5 years?

-0.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 303 has high quality earnings.

Growing Profit Margin: 303's current net profit margins (8.7%) are lower than last year (9.2%).


Past Earnings Growth Analysis

Earnings Trend: 303's earnings have declined by -0.5% per year over the past 5 years.

Accelerating Growth: 303's earnings growth over the past year (3.3%) exceeds its 5-year average (-0.5% per year).

Earnings vs Industry: 303 earnings growth over the past year (3.3%) exceeded the Communications industry -5.7%.


Return on Equity

High ROE: 303's Return on Equity (35.1%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Vtech Holdings's financial position?


Financial Position Analysis

Short Term Liabilities: 303's short term assets ($1.1B) exceed its short term liabilities ($699.8M).

Long Term Liabilities: 303's short term assets ($1.1B) exceed its long term liabilities ($123.4M).


Debt to Equity History and Analysis

Debt Level: 303 is debt free.

Reducing Debt: 303 had no debt 5 years ago.

Debt Coverage: 303 has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: 303 has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: 303 has a high level of physical assets or inventory.

Debt Coverage by Assets: Insufficient data to determine if 303's debt is covered by short term assets.


Next Steps

Dividend

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

7.07%

Current Dividend Yield


Dividend Yield vs Market

company7.1%marketbottom25%2.3%markettop25%6.2%industryaverage3.0%forecastin3Years7.5%

Current dividend yield vs market & industry

Notable Dividend: 303's dividend (7.07%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.27%).

High Dividend: 303's dividend (7.07%) is in the top 25% of dividend payers in the Hong Kong market (6.23%)


Stability and Growth of Payments

Stable Dividend: 303's dividend payments have been volatile in the past 10 years.

Growing Dividend: 303's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (84.6%), 303's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 303's dividends in 3 years are forecast to be covered by earnings (89.9% payout ratio).


Next Steps

Management

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

10.9yrs

Average board tenure


CEO

Allan Wong (68yo)

15.9yrs

Tenure

US$2,932,000

Compensation

Dr. Chi-Yun Wong, also known as Allan, GBS, SBS, B.Sc., JP, MBE, MSEE, Hon DTech, JP, has been an Independent Non-Executive Director of Li & Fung Limited since March 30, 1999. He co-founded VTech Holdings  ...


CEO Compensation Analysis

Compensation vs Market: Allan's total compensation ($USD2.93M) is above average for companies of similar size in the Hong Kong market ($USD560.00K).

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


Board Age and Tenure

10.9yrs

Average Tenure

68yo

Average Age

Experienced Board: 303's board of directors are seasoned and experienced ( 10.9 years average tenure).


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

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Ownership Breakdown

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


Management Team

  • Allan Wong (68yo)

    Co-Founder

    • Tenure: 15.9yrs
    • Compensation: US$2.93m
  • Kent Wong (56yo)

    Chief Executive Officer of the Branded Business

    • Tenure: 0yrs
  • Yu Wai Chang (59yo)

    Group Chief Compliance Officer & Company Secretary

    • Tenure: 0yrs
  • Gilles Sautier (63yo)

    International President of Europe

    • Tenure: 0yrs
  • Andy Leung (60yo)

    CEO of Contract Manufacturing Services & Executive Director

    • Tenure: 10.9yrs
    • Compensation: US$2.83m
  • Shereen Tong (50yo)

    Group Chief Financial Officer

    • Tenure: 0yrs
  • King Fai Pang (63yo)

    President & Executive Director

    • Tenure: 12.7yrs
    • Compensation: US$1.73m
  • Chorng Yeong Chu (59yo)

    Group Chief Technology Officer

    • Tenure: 0yrs
  • Hillson Cheung (51yo)

    GM of Operations & President of Telecommunication Products

    • Tenure: 0yrs
  • Corinna Chan

    Senior Corporate Communications Manager

    • Tenure: 0yrs

Board Members

  • Allan Wong (68yo)

    Co-Founder

    • Tenure: 15.9yrs
    • Compensation: US$2.93m
  • Ping Keung Ko (68yo)

    Independent Non-Executive Director

    • Tenure: 1.9yrs
    • Compensation: US$37.00k
  • Patrick Wang (68yo)

    Independent Non Executive Director

    • Tenure: 18.1yrs
    • Compensation: US$38.00k
  • William Fung (70yo)

    Independent Non Executive Director

    • Tenure: 18.1yrs
    • Compensation: US$38.00k
  • Andy Leung (60yo)

    CEO of Contract Manufacturing Services & Executive Director

    • Tenure: 10.9yrs
    • Compensation: US$2.83m
  • King Fai Pang (63yo)

    President & Executive Director

    • Tenure: 12.7yrs
    • Compensation: US$1.73m
  • Kai-Man Wong (69yo)

    Independent Non-Executive Director

    • Tenure: 7.3yrs
    • Compensation: US$39.00k
  • William Wong (40yo)

    Non-Executive Director

    • Tenure: 0.08yrs

Company Information

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


Key Information

  • Name: Vtech Holdings Limited
  • Ticker: 303
  • Exchange: SEHK
  • Founded: 1976
  • Industry: Communications Equipment
  • Sector: Tech
  • Market Cap: HK$18.777b
  • Shares outstanding: 251.54m
  • Website: https://www.vtech.com/index.html

Number of Employees


Location

  • Vtech Holdings Limited
  • Tai Ping Industrial Centre
  • 23rd Floor
  • Tai Po
  • New Territories
  • Hong Kong

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
VTKL.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
303SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDJan 1992
VTCBDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
303SHSC (Stock Exchange of Hong Kong Limited - Shanghai - Hong Kong Stock Connect)YesOrdinary SharesHKHKDJan 1992
303SZSC (The Stock Exchange of Hong Kong - Shenzhen - Hong Kong Stock Connect)YesOrdinary SharesHKHKDJan 1992
VTKL.YOTCPK (Pink Sheets LLC)UNSPONSORED ADRUSUSDMar 2011

Biography

Vtech Holdings Limited designs, manufactures, and distributes consumer electronic products in North America, Europe, the Asia Pacific, and internationally. The company offers electronic learning toys for i ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/11 12:38
End of Day Share Price2019/12/11 00:00
Earnings2019/09/30
Annual Earnings2019/03/31


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.