Kingboard Chemical Holdings Limited (0148.HK) is the world’s number one laminate manufacturer and China’s largest printed circuit board producer. Furthermore, the company is a leading supplier of chemical products in China and has other business activities ranging from manufacturing of liquid crystal displays and magnetic products to property development and investment.[mepr-active membership=”1734″ ifallowed=”show” unauth=”message” unauth_message=”Please login or purchase a membership to view full text.”] Kingboard Chemical operates more than 60 manufacturing facilities in China and Thailand. 90% of the products are sold to China. Kingboard Chemical is among Forbes’ Global 2000 leading companies and among Bloomberg’s Tech 100 companies.
Kingboard Chemical was founded in 1988 with its headquarter located in Hong Kong. The company is listed on Hong Kong’s Stock Exchange since 1993. Its shares can also be traded in Germany and the US. Around 60% of the shares are in public hand. 37% are held directly or indirectly by the chairman and a co-founder.
With a workforce of about 41,800 employees, Kingboard Chemical reported revenues of 35.8bn HKD (4.6bn USD) and a profit before tax excluding non-recurring items of 4.9bn HKD (626m USD) for 2016, an increase of 9% and 87% respectively on a year-on-year basis. In 2015 revenues and profits were down 9% while profits were up 8% compared to the year before. With operating margins of more than 21%, the company is well ahead of its competitors. Kingboard Chemical’s cash reserves at the end of 2016 have been 6.5bn HKD (832m USD). The company shows a healthy balance sheet with an equity ratio of 49% and a gearing, defined here as total liabilities to total equity, of 103%.
Kingboard Chemical’s shares are in an uptrend since September 2015 and tripled in value since, 22% alone this year. The company is still reasonably priced at only six times earnings, compared to 20 times among its sector peers. Kingboard Chemical trades currently below book value and at only four times cash flow. The last dividend payments yielded 3.5%. The two covering analysts rate the company as buy or outperformer with a target price between 36.5 and 40 HKD for the next twelve months, an increase of around 30%.
With its five business segments, the company is well diversified. We expect further sales and profits improvements, particularly in the chemicals and property division. Revenues from properties grew already by 39% in 2016. Acquisitions of competitors and investments in new segments are likely scenarios too. We remain confident that the price target of 40 HKD can be reached by the end of this year.
AIS Rating: ★★★★☆
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
|---|---|---|---|---|---|---|
| EPS (KKD) | 2.53 | 2.04 | 2.89 | 2.47 | 1.61 | 4.88 |
| Change | -28% | -19% | 42% | -15% | -35% | 203% |
| P/E | P/E SECTOR |
P/B | P/CF | Equity Ratio* |
ROE | Debt/ Equity** |
Div YLD |
|---|---|---|---|---|---|---|---|
| 6 | 20 | 0.8 | 3.6 | 49% | 14% | 103% | 3.5% |
* Equity / Total Assets, ** Total Liabilities / Equity
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