Wing Chi Holdings Limited, an investment holding company, engages in the foundation and site formation works, and machinery leasing activities in Hong Kong. It undertakes excavation and lateral support, pile caps construction, and site formation works. It serves contractors and subcontractors in public and private sector projects. The company was founded in 2001 and is headquartered in Tsuen Wan, Hong Kong. Wing Chi Holdings Limited is a subsidiary of Colourfield Global Limited.

Hong Kong

Wing Chi Holdings Limited

Industrials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

6080.HK reported revenue of HKD 818mn in the last 12 months, up 38% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 0% from FY23 to HKD 0.00.

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). Over the past six months the stock has exceeded the performance of this peer group by 87ppts and its growth decelerated by 52ppts 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 mildly favourable.

The company has reported weak EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 3.3% in the last 12 months, a decline from 3.7% in FY23. 

Historically, 6080.HK has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 0.8%, a growth from 0.6% in FY23. 

Wing Chi Holdings Limited reported a return on equity (RoE) of 4.7% in the last 12 months, up from 2.9% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 2.1% in the last 12 months, an increase from 1.5% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 4.3%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.2 in the past several years. This ratio implies a average shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

6080.HK has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is very unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny 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 resilient historical revenue growth, low margin volatility, strong debt servicing capacity, 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, bleak profitability, negligible return on capital, and poor working capital management.

In highly turbulent market conditions, 6080.HK is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, 6080.HK is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

From both historical and forecast perspectives, the stock is fairly priced compared to similar stocks. Specifically, the stock is fairly valued on P/E, undervalued on EV/EBITDA, overpriced on P/FCF. 

Wing Chi Holdings Limited

HK$ 0.1

3

Wing Chi Holdings Limited

HK$ 0.1

3

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Profitability factor

Risk / Profitability

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Profitability factor

HK$ 0.1

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