Business Profile
Source: Yahoo Finance
The firm is a Hong Kong-based investment holding company principally engaged in industrial manufacture. They manufacture and market mould bases and related products and operate in China and Hong Kong. The Company’s subsidiaries include Heyuan Lung Kee Metal Products Co., Ltd., and Super Visions International Limited, among others.
Financials
Income Statement
The firm's income statment looks slightly weak, with a net profit margin of 6.6% only. The other profitability metrics also look fairly low. What perhaps is more worrying is how the income statement had weakened over time. Revenue had a slight increase, but the company had become much less profitable in 2018.
Balance Sheet
However, the firm's balance sheet looks quite strong. Their short-term liquidity metrics look very strong. Moreover, the firm does not hold any debt at all. The firm also has a high Altman Z score of 3.51, which makes it very safe from any bankruptcy risk. Lastly, they also have a fairly strong operating cash flow/current liabilities too.
Cashflows
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The firm also produces a good amount of free cash flow as well, with an FCF margin of almost 10%. Additionally, there is also a huge surplus of cash flow left for financing activities. Moreover, the firm already has a very high cash balance and has no debt. Hence, the firm has very strong cash flows and is very cash rich. Lastly, all the cash flow metrics had improved in 2018 as compared to 2017 as well. These high cash flows have allowed the firm to pay out dividends worth more than their net income as evidenced by their payout ratio. However, given its strong cash position, the firm seems able to sustain its dividends.
Efficiency Metrics
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The firm's efficiency metrics look "alright", and are not as high as I expected. They don't seem to fall into the "good" range either. Their efficiency metrics had also decreased over time as well, probably due to the fall in earnings. As can be seen, by the operating leverage ratio, the firm had a large drop in earnings relative to the increase in sales.
Market Metrics
Based on their valuation metrics, their shares look like they are trading at a cheap price. This could potentially suggest that the firm is undervalued. What is a welcome addition is also the share's negative beta of 0.78. This could reduce the portfolio risk and provide diversification as a whole if you buy your shares since the shares are negatively correlated to the market.
Business Profile
Source: Yahoo Finance
The firm is a Hong Kong-based investment holding company principally engaged in industrial manufacture. They manufacture and market mould bases and related products and operate in China and Hong Kong. The Company’s subsidiaries include Heyuan Lung Kee Metal Products Co., Ltd., and Super Visions International Limited, among others.
Financials
Income Statement
The firm's income statment looks slightly weak, with a net profit margin of 6.6% only. The other profitability metrics also look fairly low. What perhaps is more worrying is how the income statement had weakened over time. Revenue had a slight increase, but the company had become much less profitable in 2018.
Balance Sheet
However, the firm's balance sheet looks quite strong. Their short-term liquidity metrics look very strong. Moreover, the firm does not hold any debt at all. The firm also has a high Altman Z score of 3.51, which makes it very safe from any bankruptcy risk. Lastly, they also have a fairly strong operating cash flow/current liabilities too.
Cashflows
_ _
The firm also produces a good amount of free cash flow as well, with an FCF margin of almost 10%. Additionally, there is also a huge surplus of cash flow left for financing activities. Moreover, the firm already has a very high cash balance and has no debt. Hence, the firm has very strong cash flows and is very cash rich. Lastly, all the cash flow metrics had improved in 2018 as compared to 2017 as well. These high cash flows have allowed the firm to pay out dividends worth more than their net income as evidenced by their payout ratio. However, given its strong cash position, the firm seems able to sustain its dividends.
Efficiency Metrics
_ _
The firm's efficiency metrics look "alright", and are not as high as I expected. They don't seem to fall into the "good" range either. Their efficiency metrics had also decreased over time as well, probably due to the fall in earnings. As can be seen, by the operating leverage ratio, the firm had a large drop in earnings relative to the increase in sales.
Market Metrics
Based on their valuation metrics, their shares look like they are trading at a cheap price. This could potentially suggest that the firm is undervalued. What is a welcome addition is also the share's negative beta of 0.78. This could reduce the portfolio risk and provide diversification as a whole if you buy your shares since the shares are negatively correlated to the market.