Evidence and analysis
Research evidence pack
Source-backed valuation visuals
1. Industry Fundamentals
1.1 Cyclicality
The company operates in a cyclical industry sensitive to macroeconomic conditions. Revenue and earnings tend to correlate with broader economic cycles, with periods of expansion driving growth and contractions creating headwinds. Current market capitalisation: 5.38 B.
1.2 Competition
The industry is moderately competitive with established players and meaningful barriers to entry. Beta of N/A suggests moderate market sensitivity. Competitive advantages stem from brand, scale, or regulatory moats.
1.3 Technology
Key technology drivers include digital transformation, operational efficiency, automation. Companies that invest in R&D and adopt new technologies tend to gain market share. The pace of technological change creates both opportunities for innovation and risks of disruption.
2. Company Fundamentals
2.3 Management
| Role | Metric |
|---|---|
| Consensus Rating | N/A |
2.4 Return
| Metric | Value |
|---|---|
| Expected Return (Ann.) | 527.55% |
| Risk / Std Dev (Ann.) | 78.42% |
Price Snapshot:
| Metric | Value |
|---|---|
| Last Price | 6.570 HKD |
| Day Change | -0.010 (-0.15%) |
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 | FY2026 | FY2025 |
|---|---|---|---|
| Revenue | Reported revenue | HK$589.79M | HK$435.27M |
| Net income | Reported net income | HK$54.64M | HK$45.73M |
| Total assets | Year-end reported balance | HK$456.90M | HK$329.81M |
| Shareholders’ equity | Year-end reported balance | HK$207.06M | HK$106.09M |
| Net margin | Net income ÷ revenue | 9.26% | 10.51% |
| Asset turnover | Revenue ÷ total assets | 1.2908x | 1.3198x |
| Equity multiplier | Total assets ÷ shareholders’ equity | 2.2066x | 3.1088x |
| ROE | Net margin × asset turnover × equity multiplier | 26.39% | 43.10% |
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$589.79M |
| Prior annual revenue | HK$435.27M |
| EBIT | HK$66.58M |
| Tax rate | 11.88% |
| NOPAT = EBIT × (1 − tax rate) | HK$58.67M |
| Forecast start-growth basis | 15.00% |
| Forecast policy | latest reported annual revenue growth, bounded to -10.00% / 15.00% |
Step 2 — Calculate FCFF
| Current FCFF building block | Value |
|---|---|
| NOPAT | HK$58.67M |
| Add: depreciation & amortisation | HK$80.46M |
| Less: capital expenditure | -HK$68.07M |
| Less/(add): working-capital cash-flow movement | -HK$20.88M |
| Current unlevered FCFF | HK$50.18M |
Explicit FCFF forecast
| Forecast year | Revenue growth | NOPAT | D&A | Capex | Change in NWC | FCFF | Present value |
|---|---|---|---|---|---|---|---|
| 1 | 15.00% | HK$67.47M | HK$92.53M | -HK$78.28M | -HK$24.02M | HK$57.70M | HK$55.85M |
| 2 | 11.88% | HK$75.48M | HK$103.52M | -HK$91.56M | -HK$26.87M | HK$60.57M | HK$54.91M |
| 3 | 8.75% | HK$82.09M | HK$112.58M | -HK$103.91M | -HK$29.22M | HK$61.54M | HK$52.25M |
| 4 | 5.62% | HK$86.70M | HK$118.91M | -HK$114.33M | -HK$30.86M | HK$60.42M | HK$48.05M |
| 5 | 2.50% | HK$88.87M | HK$121.88M | -HK$121.88M | -HK$31.63M | HK$57.24M | HK$42.64M |
Step 3 — Determine the Discount Rate (WACC)
| WACC input | Value |
|---|---|
| Risk-free rate | 4.71% |
| Equity risk premium assumption | 5.50% |
| Beta | 0.38 |
| Cost of equity | 6.79% |
| Pre-tax cost of debt | 4.32% |
| WACC | 6.76% |
| WACC validation | requires assumption review |
Step 4 — Estimate Terminal Value
| Terminal-value input | Value |
|---|---|
| Perpetuity growth rate | 2.50% |
| Terminal value | HK$1.38B |
| Implied terminal EV / EBITDA | 6.18x |
| Terminal value as % of enterprise value | 79.64% |
Step 5 — Discount Cash Flows to Enterprise Value
| Enterprise-value component | Value |
|---|---|
| Present value of explicit FCFF | HK$253.69M |
| Present value of terminal value | HK$992.17M |
| Indicated enterprise value | HK$1.25B |
| 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$1.25B |
| Less: gross interest-bearing debt | HK$119.18M |
| Add: cash and equivalents | HK$110.69M |
| Add: affiliate investments | HK$0.00 |
| Less: minority interests | HK$0.00 |
| Indicated common equity value | HK$1.24B |
Step 7 — Calculate Indicative Value Per Share
| Per-share output | Value |
|---|---|
| Shares used | 818,920,000.00 |
| Share-count basis | reported shares outstanding; option/RSU dilution data not separately available |
| Current market price | HK$14.30 |
| DCF indicative value per share | HK$1.51 |
| Indicative value vs. market price | -89.43% |
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 | 4/4 evidenced checks |
Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:17:36.597943 UTC; latest reported fiscal period: 2026-03-31 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
Factor-model exception: No sufficiently aligned issuer-return and regional factor-return sample is available. No Fama–French loading or alpha estimate is published on an incomplete basis.