Founding Construction Development Corp. engages in the development of public housing and commercial building for leasing and selling in Taiwan. The company operates through Architecture, Construction, and Hospitality segment. It also involved in the trading of construction materials and machines; designing and construction of interior decoration; development of business building and civil construction, as well as general investment and hotel business. The company was incorporated in 1991 and is based in Taipei City, Taiwan.

Taiwan

Founding Construction Development Corp.

Real Estate

The company pays dividends most of the time. It has paid dividends in almost every one of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. At the same time, the average five-year yield has been significantly higher and exceeded most of its peers. On average, the company pays dividends annually. 

5533.TW reported revenue of TWD 2 336mn in the last 12 months, up 4% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 3% from FY24 to TWD 1.44.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 9ppts and its growth accelerated by 0ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 23.6% in the last 12 months, a decline from 29.0% in FY23. 

Historically, 5533.TW has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 17.6%, down from 23.6% in FY23. 

Founding Construction Development Corp. reported a return on equity (RoE) of 4.3% in the last 12 months, down from 9.5% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 3.9%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to 3.5% in the last 12 months, a decrease from 7.3% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.6 in the past several years. This ratio implies a good shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

5533.TW has very poor trading liquidity. It will take several trading days for the average private investor to sell a common position under normal market conditions. Liquidity is relatively stable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a very small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note robust profitability, adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, and excessive margin volatility.

In highly turbulent market conditions, 5533.TW is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, 5533.TW is not overly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will remain relatively stable. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to negligible. 

Considering past and projected metrics, the stock is distinctly 'cheaper' than its peers. Specifically, the stock is fairly valued on P/E, undervalued on EV/EBITDA, underpriced on P/FCF. 

Founding Construction Development Corp.

NT$ 18.35

5

Founding Construction Development Corp.

NT$ 18.35

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

NT$ 18.35

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