China Lilang 1234.HK / lilanz.com
A Chinese luxury man fashion brand focusing on the Chinese market.
"As an
integrated fashion enterprise, the Group designs, sources, manufactures
and sells high-quality business and casual apparel for men under its core
brand “LILANZ” and sub-brand “L2”. Its products are sold across an
extensive distribution network, covering 31 provinces, autonomous regions
and municipalities in the PRC." - China Lilang Management
Primary listing in the Hong Kong Stock Exchange – HKSE with ticker symbol 1234.
Secondary listing in the Shanghai Stock Exchange – SSE/SHSE 1234 and Shenzen Stock Exchange – SZSE 1234.
2020
"For the year ended 31 December 2020, revenue decreased by 26.7% to RMB2,680.8 million year-onyear and net profit for the year decreased by 31.4% to RMB557.2 million.
During the year, the Group maintained a sound financial position with sufficient cash flows. The Board of Directors has resolved to pay a final dividend of HK19 cents per share and a special final dividend of HK8 cents per share, thus maintaining a relatively high payout ratio for the full year." - Financial Report 2020
 |
| 2020 Annual Report |
It's no surprise that COVID-19 made its negative impact on China Lilang's revenue, as well.
2021
Q1
"Retail Sales Performance
Retail sales (in terms of retail value) of LILANZ products for the first quarter
of 2021 increased by 30% to 35% compared to the same period in 2020." -
OPERATIONAL UPDATE FOR THE FIRST QUARTER OF 2021
Q2
"Retail Sales Performance for the Second Quarter of 2021 Retail sales (in terms of retail value) of LILANZ products for the second quarter of 2021 increased by 25% to 30% compared to the same period in 2020. Retail Sales Performance for the First Half of 2021 Retail sales (in terms of retail value) of LILANZ products for the first half of 2021 increased by 25% to 30% as compared to the same period in 2020." - OPERATIONAL UPDATE FOR THE SECOND QUARTER AND FIRST HALF OF 2021
RESEARCH & ANALYSIS
| COMPANY | CHINA LILANG | ||
| STOCK CODE | 1234 | ||
| DATE OF ANALYSIS | AUG 4, 2021 | ||
| STOCK EXCHANGE | HONG KONG | ||
| LOT SIZE | 1000 | ||
| INDUSTRY | Consumer Durables |
COLOR CODES - DIVIDEND VALUATION MODEL
| ALERT | Do not touch this company. Way too risky with lots of big problems. |
| HIGH RISK | Be very careful buying into this business as it looks like having serious problems. |
| MODERATE RISK |
The business is going trough hard times and there are issues to be solved but over time it can perform much better. |
| ALRIGHT | The business is doing alright. No real issues can be detected. |
| GOOD | A business that looks definitely a value to invest. It performs good and you can even expect 2-3 fold on your capital investment. |
| GREAT | It’s basically a no brainer. Great, profitable business with fantastic future potentials and high MOAT |
| >1 | 1-2 | 2-4 | 5-6 | 7-8 | 9-10 |
| ALERT | HIGH RISK | MODERATE RISK |
ALRIGHT | GOOD | GREAT |
In the analysis I use my Dividend Stock Valuation model for China Lilang.
I use 3 different models. 1. Dividend Model 2. Growth Model 3. Value Model The difference among them is that the Weighted Factor Values are model specific (they are different in each model).
ANALYSIS
| FACTOR | CHINA LILANG | FACTOR VALUE 1-10 | WEIGHTED FACTOR VALUES 1-10 |
| Price / Earnings – P/E | 8.9 | 10 | 10 |
| Price / Book – P/B | 1.4 | 7.5 | 7 |
| Price Earnings Growth – PEG | 0.5 | 10 | 5 |
| Price / Share – P/S | 2.21 | 3 | 3 |
| Enterprise Value / Earnigs Before Interest Tax Depereciation Amortization – EV/EBITDA |
6.4 | 10 | 10 |
| Return On Equity – ROE | 15.3 | 7.5 | 10 |
| Return On Assets – ROA | 10.3 | 10 | 5 |
| Return On Capital Employed – ROC |
17.3 | 8 | 8 |
| Earnings Per Share – EPS | 0.4653RMB 0.5597HKD |
7 | 8 |
| Operating Profit Margin | 24.3 | 10 | 10 |
| Net Profit Margin | 20.79 | 10 | 10 |
| Cashflow Positive in the last 5 years |
YES | 10 | 10 |
| Expected Growth % | 17 | 7.5 | 6 |
| Debt to Equity Ratio | NO DEBT | 10 | 10 |
| Debt to EBITDA | NO DEBT | 10 | 6 |
| Last Dividend % / year | 8.75 | 10 | 10 |
| Dividend % / year Average of the last 5 years |
9.97 | 10 | 8 |
| Dividend Payout Ratio % | 56 | 7 | 8 |
| Insider Ownership more Than 5% |
YES / 7.1% | 10 | 6 |
| Share Dilution in the last 1 year | NO | 10 | 7 |
| Insider Trading Activity In the last 1 year |
YES / SELL : BUY RATIO 25:1 |
5 | 9 |
| CEO Tenure Year | 11 | 10 | 6 |
| Management Team Tenure Year | 11 | 10 | 2 |
| Market Cap HKD / USD | 5.93B / 762 Million | 7 | 3 |
| NON-WEIGHTED SCORE | 8.67 | ||
| WEIGHTED SCORE | 7.89 | ||
| THE MOAT FACTOR | |
| Long-Term Prospects | 7.5 |
| Business Model | 10 |
| Product Sustainabilty | 7 |
| Competition | 4 |
| Management | 10 |
| Customer Base | 7 |
| MOAT SCORE | 7.58 |
| FINAL VALUE SCORE | 7.62 |
INTRINSIC VALUE
| Intrinsic Value Calculation by Financial Metric with 6% growth per year |
|
| EPS*(1+r)xP/E ratio | |
| r=expected earnings growth rate | |
| Calculated Stock Price | 34.87 |
| Intrinsic Value Calculation by Financial Metric with 5% growth per year | |
| EPS*(1+r)xP/E ratio | |
| r=expected earnings growth rate / I expect 6% per year | |
| Calculated Stock Price | 29.89 |
DIVIDEND
Average dividend of the last 5 years is 9.97% per year. I calculate with 9% per year.
| COMPOUND DIVIDEND | |
| 2 Years / 9% Yield per year | |
| INVESTED AMOUNT in HKD | 25000.00 |
| DIVIDEND YIELD % / YEAR | 0.09 |
| INTERVAL | 1.00 |
| YEARS | 2.00 |
| COMPOUND DIVIDEND RESULT in HKD | $29,566.41 |
| COMPOUND DIVIDEND | |
| 5 Years / 9% Yield per year | |
| INVESTED AMOUNT in HKD | 25000.00 |
| DIVIDEND YIELD % / YEAR | 0.09 |
| INTERVAL | 1.00 |
| YEARS | 5.00 |
| COMPOUND DIVIDEND RESULT in HKD | $38,026.50 |
| COMPOUND DIVIDEND | |
| 10 Years / 9% Yield per year | |
| INVESTED AMOUNT in HKD | 25000.00 |
| DIVIDEND YIELD % / YEAR | 0.09 |
| INTERVAL | 1.00 |
| YEARS | 10.00 |
| COMPOUND DIVIDEND RESULT in HKD | $57,840.58 |
TECHNICAL POINT OF VIEW | |||||||||||||
REALISTIC EXPECTATIONS Continously good dividend paid in 2 increments per year. Stock price can go back to the 9-12 range in the next few years making a 2-3 fold profit on your capital. |
FINAL CONCLUSION
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