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HOLI

Hollysys Automation Technologies NasdaqGS:HOLI Stock Report

Last Price

US$17.30

Market Cap

US$1.1b

7D

-4.4%

1Y

-15.1%

Updated

03 Oct, 2022

Data

Company Financials
HOLI fundamental analysis
Snowflake Score
Valuation2/6
Future Growth0/6
Past Performance1/6
Financial Health6/6
Dividends3/6

HOLI Stock Overview

Hollysys Automation Technologies Ltd. provides automation control system solutions in the People’s Republic of China, Southeast Asia, India, and the Middle East.

Hollysys Automation Technologies Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Hollysys Automation Technologies
Historical stock prices
Current Share PriceUS$17.30
52 Week HighUS$20.72
52 Week LowUS$11.05
Beta0.76
1 Month Change-12.45%
3 Month Change13.89%
1 Year Change-15.11%
3 Year Change18.74%
5 Year Change-18.97%
Change since IPO232.69%

Recent News & Updates

Sep 03

Hollysys: Umpteenth Time's A Charm

Summary Hollysys Automation Technologies Ltd. is on the verge of entering a take-private deal. A deal could be valued as high as $29/sh. The buyout story up until this point suggests a binding transaction will materialize between Hollysys and the company's CEO. There is a ~50% upside if a deal is reached under the reported terms. Therefore, speculative investors should consider adding HOLI to the portfolio. Hollysys Automation Technologies Ltd. (HOLI) is on the verge of entering a take-private deal? The latest news makes it seem so. Seeking Alpha, crediting Reuters, reported that HOLI's current CEO is closing in on making an offer to take the company private for $29/sh. That is a whopping ~50% premium over today's price. While investors have heard this story before (see previous articles here and here), this leak seems like a plausible ending to the buyout saga that is HOLI. Synthesized Buyout Story December 2020, HOLI received a take-private proposal from CPE Funds Management Limited, Ace Leads Profits Limited, and Baiqing Shao, former HOLI CEO, ("Shao Consortium") to acquire the company at $15.47/sh in cash. June 2021, the Shao Consortium raises proposal to $17.10/sh in cash. July 2021, Mr. Changli Wang, HOLI's founder and previous CEO, and Ascendent Capital Partners (“Emerald Consortium”) submitted a non-binding proposal to take HOLI private for $23/sh in cash. September 2021, Zhejiang Longsheng Group Co., Ltd. and Loyal Valley Innovation Capital Limited ( “Longshen Consortium“), presented a take-private proposal for $24/sh in cash. January 3, 2022, Changli Wang was reappointed as HOLI's CEO and nominated to the board. January 24, 2022, Recco Control Technology Pte. Ltd. and Dazheng Group Investment Holdings Company Ltd., ("Recco Consortium") announced it had previously submitted on December 3, 2021 a take-private proposal for $25/sh in cash. The consortium stated in its release, "[o]ver the last seven weeks, we have attempted to engage with [HOLI], your financial advisor and legal counsel in friendly discussions... but so far there has been no substantive progress, and the Proposal has not been made public". Also in its release, the consortium disclosed that it already had debt financing arranged through the Bank of China. Also on January 24, 2022, HOLI board decides to suspend its evaluation of all buyout proposals citing it "believes [HOLI] possesses significant value creation potential with its leading position in the automation industry, and that it is important for the Board and the management team to focus on strengthening and optimizing the business operations". March 11, 2022, TFI Asset Management Ltd. joins the Recco Consortium. March 15, 2022, Bloomberg reports that Beijing Infrastructure Investment Co., the state-owned operator of Beijing’s railway and subway, had "preliminary discussions" to take HOLI private for ~$1.9b (or ~$31/sh). April 2022, HOLI disclosed that CEO Wang purchased 1,055,000 ordinary shares in the open market. July 2022, the Recco Consortium, joined by Great Wall Capital Co., reaffirmed its $25/sh in cash take-private proposal. In its release, the consortium stated: the subsequent announcement by [HOLI] to suspend evaluation of all unsolicited buyout proposals and the board's continuing non-engaging with the consortium is not in the best interest of Hollysys' shareholders, especially in light of the attractive premium... as well as the management's inability to increase shareholders' value. September 2, 2022, Reuters reported that CEO Wang received endorsement from the municipal government and is finalizing financing to take HOLI private at $29/sh. According to the article, Wang, "acting under the local government's guidance, has joined hands with a Beijing-based state firm for the potential deal" and was close to securing financing. Imminent Buyout Theory The thesis is quite simple really. Changli Wang genuinely wants to acquire HOLI and is in the home stretch of solidifying a deal. After the company received the $24/sh Longshen Consortium and the $25/sh Recco Consortium proposals, which were both superior to his own $23/sh proposal, Wang moved to reinstitute himself as CEO of the company in order to stymie further buyout progression. On the same day that the $25/sh proposal became public (which was concealed from investors for 7 weeks!), Wang persuaded HOLI's board to publicly announce it was suspending evaluation of "all unsolicited buyout proposals". By doing so, he gave himself time to arrange a proposal that would be superior to the increasingly competitive bids for the company.

Aug 12

HollySys Automation Non-GAAP EPS of $0.40, revenue of $182.1M

HollySys Automation press release (NASDAQ:HOLI): Q4 Non-GAAP EPS of $0.40. Revenue of $182.1M (+14.7% Y/Y). GUIDANCE FISCAL YEAR 2023 The revenue is expected to be between $810 million and $885 million, with a year-on-year increase of 15% to 25%.

Jul 15

Hollysys: Waiting For A Better Entry (Technical Analysis)

Shares are currently trying to regain their 200-day moving average. We continue to like Hollysys' long-term prospects. Balance sheet, valuation and profitability trends all point to rising prices over the long haul. Intro We wrote about Hollysys Automation Technologies Ltd. (HOLI) back in early 2021 when we liked what we saw concerning the company's fundamentals and technicals. As the long-term chart illustrates below, shares briefly traded close to the $10 area back in early 2020 before registering a long-term buy signal through the popular MACD technical indicator. Because of how many shares were oversold at that time, we began to trade the stock in 2020 from the long side before finally liquidating our long exposure in Hollysys when shares lost their 10-month moving average in the following year. From a technical standpoint at present, with shares stagnating over the past few months and the monthly MACD locked in a neutral position, Hollysys seems to be at a crossroads concerning its near-term trend. In saying this, any bullish move here in the near term should bring trend followers into play on the long side, so the next few weeks of trading in this stock will be interesting. HOLI´s Trend Remains Bullish long-Term (StockCharts.com) What we are saying above regarding shares of HOLI currently at a crossroads can also be seen on the daily chart. We state this because volume trends have been very encouraging recently, but shares remain in a fight not to lose their 200-day moving average. Suffice it to say, shares must regain this crucial support level to ensure a bearish descending triangle does not play out to the downside. Daily Chart Of HOLI (StockCharts.com) Suffice it to say, given the downside potential which is still clearly evident on the monthly chart, we are only interested in trading HOLI once shares regain their 200-day moving average once more. Long-term, this stock is going higher, but we would rather not be on the other side of the trade temporarily and thus suffer an opportunity cost over a given time period which could turn out to be many months. On the contrary, long-term investors who do not mind collecting the dividend while we wait for a significant up-move just need to keep focused on the following. Many investors focus on cash-flow metrics in a stock but sometimes make the mistake of not focusing on the potential for sustained cash-flow generation over the long term. With respect to Hollysys (being a profitable company for many years now), it is all about how its earnings get converted into cash over the long haul. Well in the company's most recent reported quarter, Hollysys' cash balance and short-term investments came in well over $700 million. Given the company's present market cap of $948 million, this $700+ million number is the real calling card in Hollysys for the following reasons. Profitability Trends How does a cash balance usually get whittled down in a stock which results in cash exiting a company? This usually comes from a negative earnings trend where not enough cash is being generated to pay for operations, pay dividends or pay debts, etc. if needs be. Hollysys though is expected to announce 29% bottom-line growth ($2.09 per share) on revenues of $586 million (8% growth rate) in the fiscal year that ends in June 2022. Furthermore, shareholder equity ($1.227 billion) continues to grow and Hollysys has no debt to speak of on its balance sheet. Suffice it to say, as long as Hollysys can report sufficient sales to keep earnings and cash-flow numbers buoyant, then the balance sheet should keep on getting stronger from strategic investments in each of the company's segments. Valuation This takes care of the profitability argument from an earnings standpoint, but what if we are wrong? What if Hollysys does not live up to its billing with respect to what is expected from the stock going forward? Well, in essence, there are two drivers of long-term earnings growth which are Hollysys' assets and also its sales. At present, Hollysys trades with a book multiple of 0.77 and a sales multiple of 1.36 which are both easily 50%+ beneath the stock's respective 5-year averages for these multiples. These multiples would obviously be significantly lower if shares indeed did test the lower trend-line in the long-term chart depicted above.

Shareholder Returns

HOLIUS ElectronicUS Market
7D-4.4%-2.2%-2.5%
1Y-15.1%-24.1%-23.2%

Return vs Industry: HOLI exceeded the US Electronic industry which returned -24.1% over the past year.

Return vs Market: HOLI exceeded the US Market which returned -23.2% over the past year.

Price Volatility

Is HOLI's price volatile compared to industry and market?
HOLI volatility
HOLI Average Weekly Movement6.7%
Electronic Industry Average Movement6.7%
Market Average Movement6.8%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.8%

Stable Share Price: HOLI is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: HOLI's weekly volatility (7%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19934,398Changli Wanghttps://www.hollysys.com

Hollysys Automation Technologies Ltd. provides automation control system solutions in the People’s Republic of China, Southeast Asia, India, and the Middle East. The company offers a suite of industrial automation systems, including hardware-centric products, such as instrumentation and actuators; proprietary software-centric distributed control systems/programmable logic controllers; and valued-added software packages comprising simulation training system, HolliAS asset management system, advanced process control, and manufacturing execution system, as well as HOLLiAS MACS-N DCS, a proprietary nuclear power non-safety automation and control system. It also provides train control center, an on-ground control center that monitors route condition, track status, train schedules, distance between trains, and the working status of other function devices, as well as generates control instructions and commands.

Hollysys Automation Technologies Fundamentals Summary

How do Hollysys Automation Technologies's earnings and revenue compare to its market cap?
HOLI fundamental statistics
Market CapUS$1.07b
Earnings (TTM)US$83.18m
Revenue (TTM)US$707.46m

12.9x

P/E Ratio

1.5x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
HOLI income statement (TTM)
RevenueUS$707.46m
Cost of RevenueUS$468.11m
Gross ProfitUS$239.36m
Other ExpensesUS$156.18m
EarningsUS$83.18m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)1.34
Gross Margin33.83%
Net Profit Margin11.76%
Debt/Equity Ratio1.3%

How did HOLI perform over the long term?

See historical performance and comparison

Dividends

1.8%

Current Dividend Yield

23%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

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

Valuation Score

2/6

Valuation Score 2/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for HOLI?

Other financial metrics that can be useful for relative valuation.

HOLI 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/Revenue0.6x
Enterprise Value/EBITDA4.6x
PEG Ration/a

Price to Earnings Ratio vs Peers

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

HOLI PE Ratio vs Peers
The above table shows the PE ratio for HOLI vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average28.5x
NSSC Napco Security Technologies
54.5x35.7%US$1.1b
OSIS OSI Systems
10.8x-3.1%US$1.2b
BMI Badger Meter
43.4x8.5%US$2.8b
VNT Vontier
5.3x-8.6%US$2.8b
HOLI Hollysys Automation Technologies
12.9xn/aUS$1.1b

Price-To-Earnings vs Peers: HOLI is good value based on its Price-To-Earnings Ratio (12.9x) compared to the peer average (28.5x).


Price to Earnings Ratio vs Industry

How does HOLI's PE Ratio compare vs other companies in the US Electronic Industry?

Price-To-Earnings vs Industry: HOLI is good value based on its Price-To-Earnings Ratio (12.9x) compared to the US Electronic industry average (14.1x)


Price to Earnings Ratio vs Fair Ratio

What is HOLI'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.

HOLI PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio12.9x
Fair PE Ration/a

Price-To-Earnings vs Fair Ratio: Insufficient data to calculate HOLI's Price-To-Earnings Fair Ratio for valuation analysis.


Share Price vs Fair Value

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

Below Fair Value: HOLI ($17.3) is trading above our estimate of fair value ($5.11)

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


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Insufficient data to show price forecast.


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Future Growth

How is Hollysys Automation Technologies forecast to perform in the next 1 to 3 years based on estimates from 0 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


13.8%

Forecasted Tech industry annual growth in earnings

In this section we usually present revenue and earnings growth projections based on the consensus estimates of professional analysts to help investors understand the company’s ability to generate profit. But as Hollysys Automation Technologies has not provided enough past data and has no analyst forecast, its future earnings cannot be reliably calculated by extrapolating past data or using analyst predictions.

This is quite a rare situation as 97% of companies covered by SimplyWall St do have past financial data.


Discover growth companies

Past Performance

How has Hollysys Automation Technologies performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-4.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: HOLI has high quality earnings.

Growing Profit Margin: HOLI's current net profit margins (11.8%) are lower than last year (15.1%).


Past Earnings Growth Analysis

Earnings Trend: HOLI's earnings have declined by 4% per year over the past 5 years.

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

Earnings vs Industry: HOLI had negative earnings growth (-7.3%) over the past year, making it difficult to compare to the Electronic industry average (20.1%).


Return on Equity

High ROE: HOLI's Return on Equity (7.1%) is considered low.


Discover strong past performing companies

Financial Health

How is Hollysys Automation Technologies's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: HOLI's short term assets ($1.5B) exceed its short term liabilities ($484.6M).

Long Term Liabilities: HOLI's short term assets ($1.5B) exceed its long term liabilities ($21.4M).


Debt to Equity History and Analysis

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

Reducing Debt: HOLI's debt to equity ratio has reduced from 4% to 1.3% over the past 5 years.

Debt Coverage: HOLI's debt is well covered by operating cash flow (347.1%).

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


Balance Sheet


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Dividend

What is Hollysys Automation Technologies's 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

  • Cash Flow Coverage


1.85%

Current Dividend Yield

Dividend Yield vs Market

Hollysys Automation Technologies Dividend Yield vs Market
How does Hollysys Automation Technologies dividend yield compare to the market?
SegmentDividend Yield
Company (Hollysys Automation Technologies)1.8%
Market Bottom 25% (US)1.7%
Market Top 25% (US)4.7%
Industry Average (Electronic)1.8%
Analyst forecast in 3 Years (Hollysys Automation Technologies)n/a

Notable Dividend: HOLI's dividend (1.85%) is higher than the bottom 25% of dividend payers in the US market (1.67%).

High Dividend: HOLI's dividend (1.85%) is low compared to the top 25% of dividend payers in the US market (4.75%).


Stability and Growth of Payments

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

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


Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (23.5%), HOLI's dividend payments are well covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: With its reasonable cash payout ratio (70.4%), HOLI's dividend payments are covered by cash flows.


Discover strong dividend paying companies

Management

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

2.3yrs

Average management tenure


CEO

Changli Wang (59 yo)

0.75yr

Tenure

US$466,391

Compensation

Dr. Changli Wang serves as Chief Executive Officer, Chief Strategy Officer and Director at Hollysys Automation Technologies Ltd. since January 01, 2022. He has been the Chief Executive Officer of Beijing H...


Leadership Team

Experienced Management: HOLI's management team is considered experienced (2.3 years average tenure).


Board Members

Experienced Board: HOLI's board of directors are not considered experienced ( 2.1 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.


Ownership Breakdown

What is the ownership structure of HOLI?
Owner TypeNumber of SharesOwnership Percentage
Private Companies749,0761.2%
Hedge Funds3,963,8366.4%
Individual Insiders6,356,25310.3%
General Public14,271,18623.0%
Institutions36,622,72359.1%

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


Top Shareholders

Top 25 shareholders own 71% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
9.92%
Davis Selected Advisers LP
6,148,742$106.4m-5.11%0.63%
9.05%
Fidelity International Ltd
5,607,778$97.0m0.53%0.05%
6.95%
Baiqing Shao
4,309,223$74.5m0%no data
6.4%
Yiheng Capital Management, L.P.
3,963,836$68.6m0%4.25%
4.72%
M&G Investment Management Limited
2,923,764$50.6m-0.27%0.12%
3.6%
The Vanguard Group, Inc.
2,230,981$38.6m0.96%no data
3.48%
Wellington Management Group LLP
2,154,810$37.3m-4.52%0.01%
3.2%
Schroder Investment Management (Singapore) Ltd
1,980,302$34.3m0%0.24%
2.64%
Rubric Capital Management LP
1,633,692$28.3m73.03%1.51%
2.48%
Oasis Management Company Ltd.
1,537,919$26.6m65.23%2.3%
2.24%
Eastspring Investments (Singapore) Limited
1,390,883$24.1m11.85%0.12%
2.11%
Changli Wang
1,306,942$22.6m0%no data
1.77%
Renaissance Technologies LLC
1,099,670$19.0m-6.15%0.02%
1.73%
Segantii Capital Management Limited
1,069,106$18.5m9.04%0.64%
1.37%
Norges Bank Investment Management
846,063$14.6m0%no data
1.28%
Quinn Opportunity Partners LLC
792,978$13.7m112.15%1.36%
1.21%
Golden Result Enterprises Limited
749,076$13.0m9.92%no data
1.14%
GLG Partners, Inc.
707,643$12.2m-22.04%0.16%
1.07%
Li Qiao
663,088$11.5m0%no data
1.05%
Grantham Mayo Van Otterloo & Co. LLC
653,433$11.3m-10.78%0.04%
0.89%
Bardin Hill Investment Partners LP
554,328$9.6m11.53%1.07%
0.77%
Berry Street Capital Management LLP
475,000$8.2m0%1.84%
0.76%
Schroder Investment Management (Hong Kong) Limited
473,663$8.2m0%0.05%
0.67%
BlackRock, Inc.
416,626$7.2m37433.87%no data
0.49%
Qube Research And Technologies Ltd
302,821$5.2m-6.83%0.04%

Company Information

Hollysys Automation Technologies Ltd.'s employee growth, exchange listings and data sources


Key Information

  • Name: Hollysys Automation Technologies Ltd.
  • Ticker: HOLI
  • Exchange: NasdaqGS
  • Founded: 1993
  • Industry: Electronic Equipment and Instruments
  • Sector: Tech
  • Implied Market Cap: US$1.072b
  • Shares outstanding: 61.96m
  • Website: https://www.hollysys.com

Number of Employees


Location

  • Hollysys Automation Technologies Ltd.
  • No. 2 Disheng Middle Road
  • Beijing Eco-Tech Dev Area
  • Beijing
  • 100176
  • China


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
HOLINasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDAug 2005
46HDB (Deutsche Boerse AG)YesCommon StockDEEURAug 2005
0M58LSE (London Stock Exchange)YesCommon StockGBUSDAug 2005

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/10/03 00:00
End of Day Share Price2022/10/03 00:00
Earnings2022/06/30
Annual Earnings2022/06/30


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.