China Overseas Land & Investment in top 3% performers of Hang Seng in past week 14 February 2020

NEWS BITES - BRIC

China Overseas Land & Investment Ltd. (HK:00688), Hong Kong's largest Properties & construction company by market cap, has lifted HKD1.80 (or 6.7%) in the past week to close at HKD28.65 on Friday. This makes China Overseas Land & Investment stock the third highest performer in the Hang Seng of 50 stocks which was up 1.8% in the past week. This also indicates a relative price increase of 4.9%. The volume was 1.1 times average trading per week of 68,211,400 shares. There were 77,070,000 shares worth HKD2.2 billion (US$278.9 million) traded in the past week. In the past week the market cap has risen HKD19.7 billion (US$2.5 billion).

BULLISH TURNING POINT

Price/MAP50

The P/MAP [Price/Moving Average Price] was previously below 1 and falling. These were bearish indicators. China Overseas Land & Investment's stock is now trading above its 50 day MAP at HKD28.39, a bullish indicator.

Stock Summary

CurrencyHong Kong Dollar (HKD) 1 USD = 7.77 HKD
Today's close (HKD)28.65
52-Week Range (HKD)23.3-31.0
SectorProperties & Construction sector
Shares Outstanding10,956,201,535
Market CapHKD313.9 billion (US$40.4 billion)

Highlights in today's Report:

SECTION 1 TODAY'S BULLISH SIGNALS

SECTION 2 TODAY'S BEARISH SIGNALS

SECTION 3 RELATED NEWS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF HKD28.65):

SECTION 4 THE PAST WEEK

SECTION 5 ONGOING BULLISH PARAMETERS

SECTION 6 ONGOING BEARISH PARAMETERS

SECTION 7 SUMMARY FINANCIALS

SECTION 8 CORPORATE PROFILE

SECTION 1 CHINA OVERSEAS LAND & INVESTMENT BULLISH SIGNALS

1.1 Undervaluation [compared with sector average]:

Price/Earnings and Earnings Yield

+ Price/Earnings of 7. We estimate China Overseas Land & Investment stock is trading at a current year P/E of 6.3 and a forward year P/E of 5.8. The P/E of 7.0 plus annual inflation in the Hong Kong of 2.9% adds up to 9.9, well within the value benchmark Rule of 19.

+ Earnings yield of 14.3% is 10.2 times the 10-year bond yield of 1.4%.

Price to Book

+ The P/E of 7 multiplied by the P/NTA of 1.1 is 7.5. Being less than the Benjamin Graham benchmark of 22.5 the stock appears undervalued.

MCap/Total Assets

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.4. Compared with the rest of the market the stock is undervalued.

1.2 Uptrend:

+ Rising open interest with rising price

+ Open interest hit an 11-day high.

+ Open Interest Trend

Same day trend: The price increased 1.8% from HKD28.15 to HKD28.65; Open interest has lifted 3.4% from 19,039 to 19,682. A price rise combined with an increase in open interest suggests there is new money coming into the market from existing or new buyers. This is a bullish signal.

DurationOpen Interest change %Price change %Interpretation
1-day3.41.8Strong Market
1-week20.46.7Strong Trend

+ Put Call Contracts

The Put/Call ratio has declined from 1.075 to 1.047 suggesting an uptrend.

Put ContractsCall ContractsPut/Call ratio
Today10,0699,6131.047
Previous day9,8639,1761.075

+ Put Call Ratio decreases 2.6%

Put Call Ratio1 Day1 Week1 MonthInterpretation
Change %-2.6-25.3-24.5Uptrend

Today's Volatility:

+ China Overseas Land & Investment rises 1.8% on high volatility: Today its volatility (highest price minus lowest price/lowest price) of 3.4% was 1.3 times the average daily volatility of 2.6%, up from 2.1% on Thursday and 2.5% on Wednesday. A rise in the price on high volatility is a bullish signal.

Price/Moving Average Price:

+ The Price/MAP of 1.07 for 00688 is higher than the Price/MAP for the Hang Seng of 1.04.

+ The price to 50-day EMAP ratio is 1.0, a bullish indicator. In the past 50 days this ratio has exceeded 1.0, 29 times suggesting further upside. The 50-day EMAP has increased to HKD27.79. An increase is another bullish indicator.

+ The price to 200-day MAP ratio is 1.07, a bullish indicator. In the past 200 days this ratio has exceeded 1.07 41 times suggesting further upside. The stock is trading above both its MAPs and the 50-day MAP of HKD28.39 is higher than the 200-day MAP of HKD26.82, a bullish indicator. The 200-day MAP has increased to HKD26.82. An increase is another bullish indicator.

Past Week:

+ China Overseas Land & Investment Ltd. is placed 216/1672 in BuySellSignals' ranking of Hong Kong performers in the past week, a percentile ranking of 87.

+ In the past week, volume was 1.1 times average and the shares were up 6.7%. Friday's close price is at a 1.9% premium to its 5-day Volume Weighted Average Price (VWAP) of HKD28.11.

Past Month:

+ In the past three months the stock has hit a new 52-week high four times, pointing to an uptrend.

Relative Strength (6 months):

+ In the Hong Kong market of 1,944 stocks and 2 units traded today, the stock has a 6-month relative strength of 80 which means it is beating 80% of the market.

+ A price rise combined with a high relative strength is a bullish signal.

1.3 High Price Performance Indicators and rank of China Overseas Land & Investment in the Hong Kong market:

DescriptionValueRank In Market
MCapHKD313.9 billionIn Top 2%
Today's Trading TurnoverHKD403.7 million (US$52 million)In Top 3%
Price/MAP2001.07In Top Quartile

SECTION 2 CHINA OVERSEAS LAND & INVESTMENT BEARISH SIGNALS

2.1 Overvaluation [compared with sector average]:

Dividend Yield

+ To quote Benjamin Graham: "A dividend yield of at least two-thirds the triple-A bond yield"; the stock's dividend yield is 2.4 times the triple-A bond yield of 1.4%.

+ The relative yield of China Overseas Land & Investment, defined by its yield of 3.3%, divided by average yield of dividend yielding stocks in the Hang Seng of 3.3% is 99.7%. This suggests China Overseas Land & Investment stock is overvalued in dividend yield terms.

Price to Sales

+ Price/Sales of 1.9 [1.1].

Price to Book

+ Price to Book of 1.1 [0.7].

Price to EBITDA

+ Price to EBITDA of 4.3 [3.7].

2.2 Overvaluation Indicator and rank of China Overseas Land & Investment in the Hong Kong market:

DescriptionValueRank In Market
* EV/EBITDA4.7In Bottom Quartile

* Enterprise value of HKD338.6 billion is divided by Earnings before interest tax depreciation and amortization of HKD72.6 billion.

2.3 Downtrend:

Price/Moving Average Price and MACD:

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 27.59 minus the 26-day EMA of 27.74 is negative suggesting a bearish signal.

Past Month:

+ The price dropped 3.2% in the past month. The fall has been exacerbated by firm volume of 1.2 times average for the month.

Overbought/Bearish Signals:

+ The stock is overbought according to the Williams % R indicator of -3.9, suggesting the price is close to its 14-day high of HKD28.80.

SECTION 3 CHINA OVERSEAS LAND & INVESTMENT RELATED NEWS

American Depository Receipts

+ China Overseas Land & Investment ADR decreases

China Overseas Land & Investment ADR (OT:CAOVY) has decreased 8.0c (0.4%) from its previous trading session to close at $US18.15. Compared with the Bank of New York Mellon Composite ADR Index which fell 1.4 points (1%) in the day, the relative price increase was 0.5%. The volume was 0.1 times the average daily trading volume of 8,810 ADRs. There were 1,200 ADRs worth $US21,780 traded today.

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF HKD28.65):

SECTION 4 THE PAST WEEK

4.1 Snapshot: China Overseas Land & Investment stock was up HKD1.80 or 6.7% in the past week. Volume in the week was 1.1 times average trading of 68.2 million shares. It outperformed the Hang Seng index in 3 out of 5 days. The price ranged between a low of 26.85 on Friday, Feb 07 and a high of 28.2 on Wednesday, Feb 12.

DayChina Overseas Land & InvestmentClose price [HKD]Price change %Relative change %Comment
ThursdayFalls in weak trading with rising open interest28.15-0.20.2Price fall on falling relative strength
WednesdayKeeps rising, up 5.0% in 3 days28.20.2-0.7VI*=1.2
TuesdayIn top 2% performers of Hang Seng in past week28.153.72.4Top Rise; VI*=1.8
MondayIn top 3% performers of Hang Seng27.151.11.7Price/MAP200 above 1
FridayLoses HKD5.5 billion (US$705.8 million) in MCap26.85-1.8-1.5Week-low of 26.85 Steepest Fall

[Volume Index (VI); 1 is average]

4.2 Volatility:

+ China Overseas Land & Investment is at a discount of 7.6% to its 12-month high of HKD31.0 on January 03. It is also at a premium of 23.0% to the 12-month low of HKD23.29 on August 06, 2019.

SECTION 5 ONGOING BULLISH PARAMETERS

5.1 Performance:

+ Return on Equity 15.9% [8.8%].

+ Return on Assets 6.4% [3.0%].

+ Return on Capital Employed 15.2% [10.5%].

+ Net profit margin has averaged 25.6% in the last 3 years. This is considered superior and suggests a high margin of safety.

+ As per the Du Pont analysis, Return on Equity [ROE] of 15.9% is better than sector average of 8.8%. ROE is computed as net profit margin of 27.2% times asset turnover [sales/assets] of 0.23 times leverage factor [total assets/shareholders' equity] of 2.5.

5.2 Low Debt Indicators:

+ The debt to equity ratio of 39.2% is under a safe benchmark figure of 50%. However, it has deteriorated from 37.9% a year ago.

5.3 High Performance Indicators and rank of China Overseas Land & Investment in the Hong Kong market:

DescriptionValueRank In Market
EBITDA Margin %42.3In Top Quartile
Return on Equity [ROE] %15.9In Top Quartile

5.4 Past 5 years Annual EPS growth:

Annual ReportEPS (HKD)Growth %
20184.110.2
20173.722.2
20163.64-2.9
20153.7512.6
20143.3318.5

Average Annual Compounded rate of growth in EPS for the 5 years was 7.8%. There have been four rises and one decline in the past 5 years.

5.5 Moving Annual Return (Past 5 years)

Based on a dynamic start date of 5 years ago, the real rate of return has averaged 11.2%. The Moving Annual Return has been positive in 4 of the last 5 years. An investment a year ago in 00688 would have produced a return of 3.8%.

00688Close (HKD)Dividends (HKD)Capital Gain / (Loss) %% YieldAnnual Return %
Feb 1428.650.950.53.33.8
1 Yr ago28.520.8515.63.419.1
2 Yrs ago24.660.7712.83.516.3
3 Yrs ago21.870.7619.34.123.4
4 Yrs ago18.330.55(9.3)2.7(6.6)

Close 5 years ago HKD20.21

5.6 Increased VWAP

Past five years, 12 months ended Feb 14 (HKD)

YearHigh PriceVWAPLow Price
202031.027.1123.29
201928.7624.8121.35
201830.0823.4819.47
201724.921.6618.25
201629.2222.0517.94

In the past five years Volume Weighted Average Price (VWAP) has increased by 23.0% to HKD27.11. Based on a dynamic start date of five years ago, there have been declines in VWAP in 2 out of 5 years.

5.7 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 29.7% (or a turnover period of 3 years 4 months). The average length of ownership of the stock is 1.5 times the average holding period of 2 years 2 months for stocks in the Hang Seng suggests a larger number of core investors, making a long-term investment safer.

SECTION 6 ONGOING BEARISH PARAMETERS

6.1 High Debt Indicators:

+ Total Liabilities/EBITDA of 5.9 compares unfavourably with the Joseph Piotroski benchmark of 5.

6.2 Declining ADVT past five years

Avg. Daily Volume Traded 12 months ended Feb 14, million shares

YearADVT
202013.6
201916.6
201822.7
201722.0
201625.5

In the past five years, Average Daily Volume of Trading (ADVT) has decreased 46.5% to 13.6 million shares.

6.3 Declining Average Daily Turnover

Past five years, 12 months ended Feb 14 (HKD million)

YearAverage Daily Turnover
2020360.4
2019399.6
2018531.1
2017469.6
2016532.7

In the past five years, average daily share turnover has decreased 32.3% to HKD360.4 million (US$46.4 million). This suggests decreased liquidity.

SECTION 7 CHINA OVERSEAS LAND & INVESTMENT SUMMARY FINANCIALS

7.1 Dividend History

Trailing 12 months dividend for the 12 months ended February 14 has improved from 55.0c in 2016 to 95.0c in 2020; there were no declines in the past 5 years. Dividends were up 11.8% for the 12 months ended February 14 from 85.0c in 2019 to 95.0c in 2020.

7.2 Financials Summary

Year endedDec 2018Dec 2017Dec 2016
Sales (USD B)21.821.123.3
Pretax (USD B)9.38.27.3
Net (USD B)5.85.24.8
EPS (HKD)4.13.723.64

+ Net profit was up 10.1% from US$5.2 billion in 2017 to US$5.8 billion in 2018.

+ Earnings Per Share (EPS) was up 10.2% from HKD3.72 to HKD4.10.

7.3 Half-Yearly Report: Key Parameters

Interim Report (Half Year) Analysis H2 2019: China Overseas Land & Investment EPS increases 7.5%


Release Date: September 13, 2019

China Overseas Land & Investment (HK:00688) announced EPS of HKD2.28 (US29.18c) for the half year-ended 30 June 2019, up 7.5% from HKD2.12 (US27.13c) in the previous corresponding period.

Compared with the previous corresponding period [PCP; H/30 Jun 2018], year-over-year [y.o.y.] Revenue was up 5.4% and Net Profit was up 7.4%.

Half year-ended30 Jun 201930 Jun 2018
EPS, HKD2.282.12
PCP growth in EPS %7.557.07
Net Profit, HKD billion24.923.2
Net Profit, $US billion3.23.0
PCP growth in Net Profit %7.427.22

Major changes compared with previous corresponding period [Year-on-Year]:

Favourable Changes:

- Net profit up 7.4% from HKD23.2b ($US3.0b) to HKD24.9b ($US3.2b)

- Profit after tax to Sales up from 26.2% to 26.7%

Unfavourable Changes:

- EBIT to Sales down from 41.9% to 41.1%

- Profit before tax to Sales down from 41.9% to 41.1%

Currency Conversion (June 30, 2019): $US1 = HKD7.81

Currency Conversion (June 30, 2018): $US1 = HKD7.85

7.4 Annual Report: Key Parameters

FY2018 Annual Report: China Overseas Land & Investment Net Profit up 10.1%


Release Date: April 23, 2019

China Overseas Land & Investment (HK:00688) reported net profit for the year-ended 31 December 2018 of HKD44.9b ($US5.7b), up 10.1% from HKD40.8b ($US5.2b) in the previous year. Earnings per share (EPS) were up 10.2% from HKD3.72 (US47.61c) in FY2017 to HKD4.1 (US52.34c) in FY2018.

Major changes compared with previous year:

Favourable Changes:

- Net profit up 10.1% from HKD40.8b ($US5.2b) to HKD44.9b ($US5.7b)

- Total revenue up 3.5% from HKD164.0b ($US21.0b) to HKD169.7b ($US21.7b)

- EPS up 10.2% from HKD3.72 (US47.61c) to HKD4.1 (US52.34c)

- EBIT Margin up from 38.2% to 42.3%

- Cost of Goods Sold to Sales down from 65.8% to 61.2%

- Profit before tax to Sales up from 38.2% to 42.3%

- Sales and marketing expenses to Sales down from 1.8% to 1.5%

- Net tangible assets per share up 7.3% from HKD24.96 ($US3.2) to HKD26.79 ($US3.4)

Unfavourable Changes:

- Total revenue to total assets down from 0.3 to 0.2

- Operating Cash Flow is negative

- Current ratio down 6.2% from 2.4 to 2.3

- Working capital to total assets down from 45.7% to 43.8%

- Total non-current assets to Total Assets down from 22.3% to 21.8%

- Cash to Total Assets down from 16.1% to 13.9%

- Total Liabilities to EBITDA of 6.0 compares unfavourably with the Joseph Piotroski benchmark of <5. Note:

- EBIT to total assets steady at 10.0%

- Debt to Equity steady at 0.4

- Total liabilities to Total assets steady at 0.6

- Total current assets to Total Assets up from 77.7% to 78.2%

- Short-term investments to Total Assets up from 52.4% to 54.2%

- Long-term investments to Total Assets up from 15.1% to 15.4%

Annual Report [Year-on-year comparison: 2018 vs 2017]

Company Name : China Overseas Land & Investment Ltd. (00688)
December 312018201720182017Change
DescriptionHKD mHKD m$US m$US m(%)
Revenue from operating activities171,461.1166,04521,88821,250.4Up 3.3
Total Revenue169,658.9163,972.221,65820,985.2Up 3.5
EBITDA72,568.463,419.39,263.88,116.4Up 14.4
EBIT72,568.463,419.39,263.88,116.4Up 14.4
Pre-Tax Profit/(Loss)72,568.463,419.39,263.88,116.4Up 14.4
Profit/(Loss) after Tax44,900.340,766.85,731.85,217.3Up 10.1
Working Capital317,896295,247.940,581.337,785.8Up 7.7
Current Assets567,032.2501,790.572,385.164,219.1Up 13
Current Liabilities249,136.2206,542.631,803.726,433.3Up 20.6
Shareholders' Funds293,606.2273,543.437,480.635,008.1Up 7.3
Total Liabilities431,734.4371,861.455,113.547,590.8Up 16.1
Total Assets725,340.7645,404.892,594.182,598.9Up 12.4
Current Debt14,62713,324.61,867.21,705.3Up 9.8
Non-Current Debt100,504.290,256.112,83011,551Up 11.4
Total Debt115,131.2103,580.714,697.213,256.3Up 11.2
Cash and cash equivalents100,555.4104,050.612,836.513,316.4Down 3.4
Operating Cash Flow(8,190.9)(42,037.4)(1,045.6)(5,379.9)Improved 80.5
Net Assets293,606.2273,543.437,480.635,008.1Up 7.3
Net Tangible Assets293,541.7273,478.937,472.434,999.8Up 7.3
AuditorPricewaterhouseCoopers LLP 

Year-on-year comparison of Per Share figures

December 312018201720182017Change (%)
DescriptionHKD HKD $US $US
Revenue from operating activities1,565c1,515.5 cUS199.8cUS194cUp 3.3
EBIT662.4c578.8 cUS84.6cUS74.1cUp 14.4
EBITDA662.4c578.8 cUS84.6cUS74.1cUp 14.4
Cash45.140.35.85.2Up 11.7
Working Capital2926.93.73.4Up 7.7
Shareholders' Funds26.8253.43.2Up 7.3
Total Liabilities39.433.954.3Up 16.1
Total Assets66.258.98.57.5Up 12.4
Current Debt133.5c121.6 cUS17cUS15.6cUp 9.8
Non-Current Debt917.3c823.8 cUS117.1cUS105.4cUp 11.4
Total Debt1,050.8c945.4 cUS134.1cUS121cUp 11.2
Net Tangible Assets26.8253.43.2Up 7.3
EPS Final410c372 cUS52.3cUS47.6cUp 10.2
    EPS Growth Factor*1.01    

* EPS Growth Factor = EPS growth / Net Profit growth

Year-on-year comparison of Performance Ratios

December 3120182017Change (%)
Debt/Equity (Up 2.6% from 0.38 to 0.39)0.40.4Up 2.6
Total Liabilities/Total Assets (Up 3.4% from 0.58 to 0.6)0.60.6Up 3.4
Current Ratio2.32.4Down 6.2
Common Size Ratios by Assets %
Total current assets to Total Assets 78.2 77.7 Up 0.6
Short-term investments to Total Assets 54.2 52.4 Up 3.5
Total non-current assets to Total Assets 21.8 22.3 Down 2.0
Long-term investments to Total Assets 15.4 15.1 Up 1.9
Cash to Total Assets 13.9 16.1 Down 13.8
Common Size Ratios by Sales %
Cost of Goods Sold to Sales 61.2 65.8 Down 7.0
Profit before tax to Sales 42.3 38.2 Up 10.8
Administration expenses to Sales 1.7 1.7 Down 0.9
Sales and marketing expenses to Sales 1.5 1.8 Down 15.6
Tax expenses to Sales (15.1) (12.8) Down 17.8

Currency Conversion (December 31, 2018): $US1 = HKD7.83

Currency Conversion (December 31, 2017): $US1 = HKD7.81

Five-year record of growth and performance:

In the last 5 years Total Revenue averaged HKD166.6B ($US21.3B), EBITDA averaged HKD58.9B ($US7.5B) and Net Profit averaged HKD38.1B ($US4.9B). Compound Annual Growth Rate (CAGR) averaged 14.6% for Total Revenue, 14.3% for Net Profit and 16.8% for EBITDA.

DescriptionAnnual (HKD B)Annual ($US B)5-year Avg (HKD B)5-year Avg ($US B)5-year CAGR %
Total Revenue169.721.7166.621.314.6
EBITDA72.69.358.97.516.8
Operating Profit72.69.358.87.516.9
Net Profit44.95.738.14.914.3

Five-year record of EBITDA, Operating Profit, Net Profit, ROE, ROA and ROCE

In 2018 Net Profit Margin of 27.2% was above its 5-year Avg of 23.8% (All Figures in %)

Description20185-year Avg
EBITDA Margin42.336.8
Operating Profit Margin42.336.8
Net Profit Margin27.223.8
Return on Equity15.917.4
Return on Assets6.46.5
Return on Capital Employed15.215.9

SECTION 8 CORPORATE PROFILE

8.1 Activities

China Overseas Land & Investment core business is the development and sales of property projects. The Company has successfully invested and developed numerous popular and exquisite properties in 22 cities. The Company is also engaged in other property-related businesses such as property investment, property management, construction design etc.

8.2 Top Management

The chairman is Yan Jianguo and the chief executive officer is Zhang Zhichao.

8.3 Issued Capital and MCap

Based on 10,956,201,535 issued shares the market capitalisation is HKD313.9 billion (US$40.4 billion).

8.4 Vanguard Total World Stock ETF 7670:

The stock was one of 7670 global stocks selected by Vanguard Total World Stock ETF (VT) who bought 256,000 shares in the period Oct 31, 2019 to Nov 30, 2019 worth $US6,742,861 at an estimated Volume Weighted Average Price (VWAP) of $US26.3393. As at Nov 30, 2019, the Vanguard Total World Stock ETF held 1,434,480 shares worth $US4,826,350 or 0.03% by value of the ETF's portfolio [Ranked 662 out of 7670 by value and 21 out of 513 for Hong Kong].

COMPANY IDENTIFIERS

Contact: (852) 2823-7888

Physical Address: 10/F Three Pacific Place 1 Queen's Road East Hong Kong

State/Province/Country: Hong Kong

Country of Incorporation: Hong Kong

Exchange: Hong Kong Stock Exchange

Economic Sector: Industrials

Business Sector: Industrial & Commercial Services

Industry Group: Construction & Engineering

Industry: Construction & Engineering

ISIN: HK0688002218

HK:00688; 0688.HK

PermID: 4295871425

RIC: 0688.HK

China Overseas Land & Investment Ltd

Source: www.BuySellSignals.com