SEHK:2886

Stock Analysis Report

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Executive Summary

Binhai Investment Company Limited, an investment holding company, engages in the construction of gas pipeline networks, provision of connection services, and sale of liquefied petroleum gas (LPG) and piped gas in Hong Kong.


Snowflake Analysis

Second-rate dividend payer with imperfect balance sheet.

Share Price & News

How has Binhai Investment's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 2886 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0%

2886

-0.8%

HK Gas Utilities

2.8%

HK Market


1 Year Return

-5.6%

2886

-19.6%

HK Gas Utilities

-1.0%

HK Market

Return vs Industry: 2886 exceeded the Hong Kong Gas Utilities industry which returned -19.6% over the past year.

Return vs Market: 2886 underperformed the Hong Kong Market which returned -1% over the past year.


Shareholder returns

2886IndustryMarket
7 Day0%-0.8%2.8%
30 Day-5.6%-3.1%8.0%
90 Day-1.7%-2.0%12.0%
1 Year-3.0%-5.6%-17.6%-19.6%3.1%-1.0%
3 Year-29.9%-36.6%16.7%9.2%7.1%-4.4%
5 Year-58.7%-64.6%35.9%22.2%8.7%-9.4%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Binhai Investment undervalued compared to its fair value and its price relative to the market?

17.08x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: 2886 (HK$1.18) is trading above our estimate of fair value (HK$0.97)

Significantly Below Fair Value: 2886 is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: 2886 is poor value based on its PE Ratio (17.1x) compared to the HK Gas Utilities industry average (15.2x).

PE vs Market: 2886 is poor value based on its PE Ratio (17.1x) compared to the Hong Kong market (10.3x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate 2886's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: 2886's PB Ratio (1.5x) is in line with the HK Gas Utilities industry average.


Next Steps

Future Growth

How is Binhai Investment forecast to perform in the next 1 to 3 years based on estimates from 1 analyst?

13.2%

Forecasted annual revenue growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if 2886's forecast earnings growth is above the savings rate (1.6%).

Earnings vs Market: Insufficient data to determine if 2886's earnings are forecast to grow faster than the Hong Kong market

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

Revenue vs Market: 2886's revenue (13.2% per year) is forecast to grow faster than the Hong Kong market (11% per year).

High Growth Revenue: 2886's revenue (13.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 2886's Return on Equity is forecast to be low in 3 years time (14.8%).


Next Steps

Past Performance

How has Binhai Investment performed over the past 5 years?

-16.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 2886 has a large one-off gain of HK$36.3M impacting its December 31 2019 financial results.

Growing Profit Margin: 2886's current net profit margins (2.3%) are lower than last year (3.1%).


Past Earnings Growth Analysis

Earnings Trend: 2886's earnings have declined by -16.5% per year over the past 5 years.

Accelerating Growth: 2886's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 2886 had negative earnings growth (-22%) over the past year, making it difficult to compare to the Gas Utilities industry average (6.9%).


Return on Equity

High ROE: 2886's Return on Equity (8.8%) is considered low.


Next Steps

Financial Health

How is Binhai Investment's financial position?


Financial Position Analysis

Short Term Liabilities: 2886's short term assets (HK$1.4B) do not cover its short term liabilities (HK$4.6B).

Long Term Liabilities: 2886's short term assets (HK$1.4B) exceed its long term liabilities (HK$104.9M).


Debt to Equity History and Analysis

Debt Level: 2886's debt to equity ratio (189.2%) is considered high.

Reducing Debt: 2886's debt to equity ratio has increased from 169.9% to 189.2% over the past 5 years.

Debt Coverage: 2886's debt is well covered by operating cash flow (27.5%).

Interest Coverage: 2886's interest payments on its debt are not well covered by EBIT (2.7x coverage).


Balance Sheet


Next Steps

Dividend

What is Binhai Investment current dividend yield, its reliability and sustainability?

2.97%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: 2886's dividend (2.97%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.3%).

High Dividend: 2886's dividend (2.97%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.79%).


Stability and Growth of Payments

Stable Dividend: 2886 has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: 2886 has only been paying a dividend for 6 years, and since then payments have fallen.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (50.7%), 2886's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 2886's dividends in 3 years are forecast to be well covered by earnings (30.1% payout ratio).


Next Steps

Management

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

10.7yrs

Average management tenure


CEO

Liang Gao (53yo)

10.92yrs

Tenure

HK$1,361,000

Compensation

Mr. Liang Gao has been Compliance Officer of Binhai Investment Company Limited since February 9, 2010 and serves as its Chief Executive. Mr. Gao has been General Manager and Executive Director of Binhai In ...


CEO Compensation Analysis

Compensation vs Market: Liang's total compensation ($USD175.59K) is below average for companies of similar size in the Hong Kong market ($USD266.94K).

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


Leadership Team

NamePositionTenureCompensationOwnership
Bing Jun Zhang
Executive Chairman9.42yrsHK$400.00kno data
Liang Gao
Chief Executive10.92yrsHK$1.36mno data
Ji Wen Hui
Chief Financial Officerno datano datano data
Wai Yip
Company Secretary10.67yrsno datano data
Long Wang
Deputy GM & Secretary to the Board1.5yrsno datano data

10.7yrs

Average Tenure

52.5yo

Average Age

Experienced Management: 2886's management team is seasoned and experienced (10.7 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Bing Jun Zhang
Executive Chairman9.42yrsHK$400.00kno data
Liang Gao
Chief Executive10.92yrsHK$1.36mno data
Siu Ki Lau
Independent Non-Executive Director11.33yrsHK$264.00kno data
Shing Hing Ip
Independent Non-Executive Director11.33yrsHK$264.00kno data
Japhet Sebastian Law
Independent Non-Executive Director11.33yrsHK$264.00k0.0085% HK$118.1k
Gang Wang
Non-Executive Director16.17yrsHK$200.00kno data
Bo Peng
Non-Executive Director0.83yrHK$53.00kno data
Ke Xiang Yu
Non-Executive Director2yrsHK$200.00kno data
Hong Mei Cao
Non-Executive Director0.83yrHK$53.00kno data

10.9yrs

Average Tenure

54yo

Average Age

Experienced Board: 2886's board of directors are seasoned and experienced ( 10.9 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.


Ownership Breakdown

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


Top Shareholders

Company Information

Binhai Investment Company Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Binhai Investment Company Limited
  • Ticker: 2886
  • Exchange: SEHK
  • Founded: 1994
  • Industry: Gas Utilities
  • Sector: Utilities
  • Market Cap: HK$1.386b
  • Shares outstanding: 1.17b
  • Website: https://www.binhaiinv.com

Number of Employees


Location

  • Binhai Investment Company Limited
  • Tower Two
  • Suites 3205-07, 32nd Floor
  • Causeway Bay
  • Hong Kong

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
2886SEHK (The Stock Exchange of Hong Kong Ltd.)YesOrdinary SharesHKHKDJul 2001
WS7ADB (Deutsche Boerse AG)YesOrdinary SharesDEEURJul 2001

Biography

Binhai Investment Company Limited, an investment holding company, engages in the construction of gas pipeline networks, provision of connection services, and sale of liquefied petroleum gas (LPG) and piped gas in Hong Kong. The company operates through Sales of Piped Natural Gas, Construction and Gas Pipeline Installation Service, Gas Passing through Service, and Sales of Bottled Natural Gas segments. It also sells piped and bottled natural gas through its pipeline networks to residential and industrial users. In addition, the company is involved in the construction of gas pipelines and installation of appliances to connect customers to pipeline networks under connection contracts to industrial and commercial customers, property developers, and property management companies. As of December 31, 2019, it had a gas pipeline network of approximately 3,048 kilometers. The company was founded in 1994 and is headquartered in Causeway Bay, Hong Kong. Binhai Investment Company Limited is a subsidiary of Teda Hong Kong Property Company Limited. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/07/12 12:41
End of Day Share Price2020/07/10 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.