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HK Equities · Finance research note

HKEX 1004 - China Smarter Energy Group Holdings Ltd.

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2. Company Fundamentals

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 134.00%
Risk / Std Dev (Ann.)* 245.47%
1-Year Price Return* -45.00%

Latest Market Data (as of 2026-08-11, Hong Kong time):

Metric Value
Last Price HK$0.165
52-Week Range HK$0.108 – HK$1.12
Observation Count 245 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year price series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

DuPont Model Analysis

The DuPont model decomposes return on equity (ROE) into three operating and capital-structure drivers:

ROE = Net Margin × Asset Turnover × Equity Multiplier

The comparison uses the latest two comparable annual periods available for the issuer, with reported statement amounts shown in HK$. Revenue and net income are income-statement flows; total assets and shareholders’ equity are year-end balance-sheet figures. This is a simplified year-end-balance DuPont comparison rather than an average-balance ROE calculation.

DuPont component Calculation FY2025 FY2022
Revenue Reported revenue HK$77.45M HK$195.91M
Net income Reported net income HK$-170.90M HK$-94.74M
Total assets Year-end reported balance HK$506.01M HK$2.15B
Shareholders’ equity Year-end reported balance HK$-1.25B HK$-241.68M
Net margin Net income ÷ revenue -220.66% -48.36%
Asset turnover Revenue ÷ total assets 0.1531x 0.0910x
Equity multiplier Total assets ÷ shareholders’ equity -0.4044x -8.9118x
ROE Net margin × asset turnover × equity multiplier 13.66% 39.20%

Source: Yahoo Finance annual statements. Values are based on the two latest comparable annual periods returned by the source; fiscal period labels use the statement period-end year.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue HK$77.45M
Prior annual revenue NM
EBIT HK$43.82M
Tax rate 16.50%
NOPAT = EBIT × (1 − tax rate) HK$36.59M
Forecast start-growth basis 3.50%
Forecast policy 3.50% internally constructed starting growth because a prior annual revenue value was unavailable

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT HK$36.59M
Add: depreciation & amortisation HK$28.26M
Less: capital expenditure -HK$36,000.00
Less/(add): working-capital cash-flow movement HK$13.32M
Current unlevered FCFF HK$78.13M

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 3.50% HK$37.87M HK$29.25M -HK$37,260.00 HK$13.79M HK$80.87M HK$78.43M
2 3.25% HK$39.10M HK$30.20M -HK$7.58M HK$14.24M HK$75.96M HK$69.29M
3 3.00% HK$40.27M HK$31.10M -HK$15.57M HK$14.66M HK$70.47M HK$60.46M
4 2.75% HK$41.38M HK$31.96M -HK$23.98M HK$15.07M HK$64.43M HK$51.99M
5 2.50% HK$42.42M HK$32.76M -HK$32.76M HK$15.44M HK$57.86M HK$43.91M

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 0.09
Cost of equity 5.21%
Pre-tax cost of debt 7.71%
WACC 6.32%
WACC validation requires assumption review

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value HK$1.55B
Implied terminal EV / EBITDA 18.58x
Terminal value as % of enterprise value 78.98%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF HK$304.08M
Present value of terminal value HK$1.14B
Indicated enterprise value HK$1.45B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value HK$1.45B
Less: gross interest-bearing debt HK$692.46M
Add: cash and equivalents HK$48.15M
Add: affiliate investments HK$0.00
Less: minority interests -HK$20,000.00
Indicated common equity value HK$802.28M

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 468,717,568.00
Share-count basis reported shares outstanding; option/RSU dilution data not separately available
Current market price HK$0.16
DCF indicative value per share HK$1.71
Indicative value vs. market price 969.78%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range review required
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 3/4 evidenced checks
Lynch-inspired balance-and-growth checks 3/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 16:43:01.399064 UTC; latest reported fiscal period: 2025-12-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

2.7 Quantitative Factor Diagnostics

Model basis: Daily issuer USD excess returns are regressed in-sample using ordinary least squares on matching regional Fama–French factors. FF3 estimates market, size, and value loadings; FF5 adds profitability and investment. Coefficients are descriptive historical exposures, not predictions.

Estimation input Value
Regional factor set Asia Pacific ex Japan
Factor-return currency USD
Issuer-return basis USD adjusted total return
Estimation window 2025-08-20 to 2026-06-30
Aligned daily observations 210
Minimum observation requirement 120
Currency conversion for HK listings HKD adjusted close divided by daily USD/HKD close before simple daily return calculation

Fama–French Three-Factor and Five-Factor Results

Diagnostic FF3 FF5
Annualised alpha 123.18% 173.38%
Adjusted R² -0.01 -0.01
Annualised residual volatility 261.27% 260.03%
Factor loading (t-statistic) FF3 FF5
Market excess return (Mkt-RF) -0.08 (-0.05) -0.90 (-0.56)
Size (SMB) 1.69 (0.77) -0.42 (-0.15)
Value (HML) -0.37 (-0.18) 0.45 (0.20)
Profitability (RMW) NM 0.49 (0.17)
Investment (CMA) NM -4.53 (-1.38)

Definitions: Mkt-RF is the market return less the risk-free rate; SMB is small minus big; HML is high minus low book-to-market; RMW is robust minus weak profitability; CMA is conservative minus aggressive investment. Factor returns are sourced from the Kenneth R. French Data Library; issuer adjusted-return history is sourced from Yahoo Finance. For Hong Kong listings, adjusted HKD prices are converted into USD with daily USD/HKD closes before return calculation to match the USD regional factor basis. This is an in-sample historical regression; coefficients and t-statistics do not establish causation or predict future returns. This is research and analysis only, not personalized financial advice.

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