China Railway Signal & Communication (SEHK:3969) - Share price, News & Analysis

3969 fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	1/6
Past Performance	2/6
Financial Health	5/6
Dividends	3/6

3969 Stock Overview

China Railway Signal & Communication Corporation Limited, together with its subsidiaries, provides rail transportation control system solutions in China and internationally.

Rewards

Trading at 79.2% below our estimate of its fair value

Earnings are forecast to grow 4.43% per year

Risk Analysis

Unstable dividend track record

China Railway Signal & Communication Competitors

Price History & Performance

Summary of all time highs, changes and price drops for China Railway Signal & Communication
Historical stock prices
Current Share Price	HK$2.62
52 Week High	HK$3.09
52 Week Low	HK$2.36
Beta	0.29
1 Month Change	-5.42%
3 Month Change	3.56%
1 Year Change	-7.75%
3 Year Change	-53.87%
5 Year Change	-56.48%
Change since IPO	-58.54%

Recent News & Updates

May 25

Is China Railway Signal & Communication (HKG:3969) A Risky Investment?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of...

Shareholder Returns

	3969	HK Electronic	HK Market
7D	1.9%	-3.0%	1.2%
1Y	-7.7%	-42.2%	-23.3%

Return vs Industry: 3969 exceeded the Hong Kong Electronic industry which returned -42.2% over the past year.

Return vs Market: 3969 exceeded the Hong Kong Market which returned -23.3% over the past year.

Price Volatility

Is 3969's price volatile compared to industry and market?
3969 volatility
3969 Average Weekly Movement	3.6%
Electronic Industry Average Movement	6.5%
Market Average Movement	7.0%
10% most volatile stocks in HK Market	13.7%
10% least volatile stocks in HK Market	3.3%

Stable Share Price: 3969 is less volatile than 75% of Hong Kong stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: 3969's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1953	20,288	Zongxiang Xu	https://www.crsc.cn

China Railway Signal & Communication Corporation Limited, together with its subsidiaries, provides rail transportation control system solutions in China and internationally. It operates through three segments: Rail Transportation Control System, General Engineering Contracting, and Others. The company offers design, consultancy, and system integration services for rail transportation control system projects.

China Railway Signal & Communication Fundamentals Summary

How do China Railway Signal & Communication's earnings and revenue compare to its market cap?
3969 fundamental statistics
Market Cap	CN¥43.89b
Earnings (TTM)	CN¥3.34b
Revenue (TTM)	CN¥38.73b

7.1x

P/E Ratio

0.6x

P/S Ratio

Is 3969 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
3969 income statement (TTM)
Revenue	CN¥38.73b
Cost of Revenue	CN¥30.29b
Gross Profit	CN¥8.44b
Other Expenses	CN¥5.10b
Earnings	CN¥3.34b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	0.32
Gross Margin	21.79%
Net Profit Margin	8.62%
Debt/Equity Ratio	8.2%

How did 3969 perform over the long term?

See historical performance and comparison

Dividends

7.6%

Current Dividend Yield

57%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is 3969 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

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 3969?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 3969. This is calculated by dividing 3969's market cap by their current preferred multiple.
What is 3969's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CN¥43.89b

3969 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	0.7x
Enterprise Value/EBITDA	6.2x
PEG Ratio	1.6x

Price to Earnings Ratio vs Peers

How does 3969's PE Ratio compare to its peers?

3969 PE Ratio vs Peers

The above table shows the PE ratio for 3969 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	5.5x

Forward PE

Price-To-Earnings vs Peers: 3969 is expensive based on its Price-To-Earnings Ratio (7.1x) compared to the peer average (5.5x).

Price to Earnings Ratio vs Industry

How does 3969's PE Ratio compare vs other companies in the Hong Kong Electronic Industry?

Price-To-Earnings vs Industry: 3969 is expensive based on its Price-To-Earnings Ratio (7.1x) compared to the Hong Kong Electronic industry average (7x)

Price to Earnings Ratio vs Fair Ratio

What is 3969'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.

3969 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	7.1x
Fair PE Ratio	8x

Price-To-Earnings vs Fair Ratio: 3969 is good value based on its Price-To-Earnings Ratio (7.1x) compared to the estimated Fair Price-To-Earnings Ratio (8x).

Share Price vs Fair Value

What is the Fair Price of 3969 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 3969 (HK$2.62) is trading below our estimate of fair value (HK$12.62)

Significantly Below Fair Value: 3969 is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: 3969 is poor value based on its PEG Ratio (1.6x)

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Future Growth

How is China Railway Signal & Communication forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

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

4.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: 3969's forecast earnings growth (4.4% per year) is above the savings rate (1.5%).

Earnings vs Market: 3969's earnings (4.4% per year) are forecast to grow slower than the Hong Kong market (16.8% per year).

High Growth Earnings: 3969's earnings are forecast to grow, but not significantly.

Revenue vs Market: 3969's revenue (4.1% per year) is forecast to grow slower than the Hong Kong market (10.1% per year).

High Growth Revenue: 3969's revenue (4.1% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: 3969's Return on Equity is forecast to be low in 3 years time (8.5%).

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Past Performance

How has China Railway Signal & Communication performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

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

1.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 3969 has high quality earnings.

Growing Profit Margin: 3969's current net profit margins (8.6%) are lower than last year (9.4%).

Past Earnings Growth Analysis

Earnings Trend: 3969's earnings have grown by 1.8% per year over the past 5 years.

Accelerating Growth: 3969's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 3969 had negative earnings growth (-14.5%) over the past year, making it difficult to compare to the Electronic industry average (19.6%).

Return on Equity

High ROE: 3969's Return on Equity (8.2%) is considered low.

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Financial Health

How is China Railway Signal & Communication's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

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

Financial Position Analysis

Short Term Liabilities: 3969's short term assets (CN¥87.9B) exceed its short term liabilities (CN¥58.3B).

Long Term Liabilities: 3969's short term assets (CN¥87.9B) exceed its long term liabilities (CN¥4.5B).

Debt to Equity History and Analysis

Debt Level: 3969 has more cash than its total debt.

Reducing Debt: 3969's debt to equity ratio has increased from 2.5% to 8.2% over the past 5 years.

Debt Coverage: 3969's debt is well covered by operating cash flow (79.9%).

Interest Coverage: 3969 earns more interest than it pays, so coverage of interest payments is not a concern.

Balance Sheet

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Dividend

What is China Railway Signal & Communication current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

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

7.61%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: 3969's dividend (7.61%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.76%).

High Dividend: 3969's dividend (7.61%) is low compared to the top 25% of dividend payers in the Hong Kong market (7.89%).

Stability and Growth of Payments

Stable Dividend: 3969 has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: 3969's dividend payments have increased, but the company has only paid a dividend for 6 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (56.9%), 3969's dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: At its current cash payout ratio (79.1%), 3969's dividend payments are covered by cash flows.

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Management

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

3.6yrs

Average management tenure

CEO

Zongxiang Xu (58 yo)

2.5yrs

Tenure

CN¥929,082

Compensation

Mr. Zongxiang Xu serves as Executive Director at China Railway Signal & Communication Corporation Limited since February 12, 2020 and has been its President since December 4, 2019. Mr. Xu has been the depu...

CEO Compensation Analysis

Compensation vs Market: Zongxiang's total compensation ($USD138.71K) is below average for companies of similar size in the Hong Kong market ($USD660.82K).

Compensation vs Earnings: Zongxiang's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.

Leadership Team

Experienced Management: 3969's management team is considered experienced (3.6 years average tenure).

Board Members

Experienced Board: 3969's board of directors are not considered experienced ( 2.3 years average tenure), which suggests a new board.

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.

Data	Last Updated (UTC time)
Company Analysis	2022/06/24 00:00
End of Day Share Price	2022/06/24 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31