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Cheung Kong Holdings, Ltd. (OTCPK:CHEUY)
Piotroski F-Score
3 (As of Today)

Warning Sign:

Piotroski F-Score of 3 is low, which usually implies poor business operation.

The zones of discrimination were as such:

Good or high score = 8 or 9
Bad or low score = 0 or 1

Cheung Kong Holdings, Ltd. has an F-score of 6 indicating the company's financial situation is typical for a stable company.

CHEUY' s 10-Year Piotroski F-Score Range
Min: 1   Max: 6
Current: 3

1
6

During the past 13 years, the highest Piotroski F-Score of Cheung Kong Holdings, Ltd. was 6. The lowest was 1. And the median was 4.


Definition

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Net Income was $4,637 Mil.
Cash Flow from Operations was $915 Mil.
Revenue was $2,769 Mil.
Gross Profit was $1,740 Mil.
Total Assets at the begining of this year (Dec12) was $52,460 Mil.
Total Assets was $55,277 Mil.
Long-Term Debt was $5,085 Mil.
Total Current Assets was $15,108 Mil.
Total Current Liabilities was $1,994 Mil.
Net Income was $4,180 Mil.

Revenue was $2,758 Mil.
Gross Profit was $1,492 Mil.
Total Assets at the begining of last year (Dec11) was $48,079 Mil.
Total Assets was $52,460 Mil.
Long-Term Debt was $5,546 Mil.
Total Current Assets was $13,459 Mil.
Total Current Liabilities was $2,604 Mil.

Profitability

Q1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Cheung Kong Holdings, Ltd.'s current net income was 4,637. ==> Positive ==> Score 1.

Q2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by total assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Cheung Kong Holdings, Ltd.'s current cash flow from operations was 915. ==> Positive ==> Score 1.

Q3. Change in Return on Assets

Compare this year’s return on assets (1) to last year’s return on assets.

Score 1 if it’s higher, 0 if it’s lower.

ROA (This Year)=Net Income/Total Assets at the beginning of this year (Dec12)
=4636.76205208/52460.3379337
=0.08838605

ROA (Last Year)=Net Income/Total Assets at the beginning of last year (Dec11)
=4180.05933187/48078.5879928
=0.08694222

Cheung Kong Holdings, Ltd.'s return on assets of this year was 0.08838605. Cheung Kong Holdings, Ltd.'s return on assets of last year was 0.08694222. ==> This year is higher. ==> Score 1.

Q4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA =< ROA.

Cheung Kong Holdings, Ltd.'s current net income was 4,637. Cheung Kong Holdings, Ltd.'s current cash flow from operations was 915. ==> 915 =< 4,637 ==> CFROA =< ROA ==> Score 0.

Funding

Q5. Change in Gearing or Leverage

Compare this year’s gearing (long-term debt divided by average total assets) to last year’s gearing.

Score 1 if gearing is lower, 0 if it’s higher.

Gearing (This Year)=Long-Term Debt/Total Assets
=5085.33127095/55276.7465842
=0.09199766

Gearing (Last Year)=Long-Term Debt/Total Assets
=5546.36914743/52460.3379337
=0.105725

Cheung Kong Holdings, Ltd.'s gearing of this year was 0.09199766. Cheung Kong Holdings, Ltd.'s gearing of last year was 0.105725. ==> This year is lower. ==> Score 1.

Q6. Change in Working Capital (Liquidity)

Compare this year’s current ratio (current assets divided by current liabilities) to last year’s current ratio.

Score 1 if this year’s current ratio is higher, 0 if it’s lower

Current Ratio (This Year)=Total Current Assets/Total Current Liabilities
=15107.6308327/1993.55503996
=7.57823613

Current Ratio (Last Year)=Total Current Assets/Total Current Liabilities
=13458.6611634/2604.02424868
=5.16840854

Cheung Kong Holdings, Ltd.'s current ratio of this year was 7.57823613. Cheung Kong Holdings, Ltd.'s current ratio of last year was 5.16840854. ==> This year's current ratio is higher. ==> Score 1.

Q7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 1 if there is fewer number of shares in issue this year. Score 0 otherwise.

Cheung Kong Holdings, Ltd.'s number of shares in issue this year was 2316.2. Cheung Kong Holdings, Ltd.'s number of shares in issue last year was 2316.2. ==> There is more number of shares in issue this year. ==> Score 0.

Efficiency

Q8. Change in Gross Margin

Compare this year’s gross margin (gross profit divided by sales) to last year’s.

Score 1 if this year’s gross margin is higher, 0 if it’s lower.

Gross Margin (This Year)=Gross Profit/Revenue
=1739.75251353/2768.75483372
=0.62835196

Gross Margin (Last Year)=Gross Profit/Revenue
=1492.19656907/2757.51322069
=0.5411385

Cheung Kong Holdings, Ltd.'s gross margin of this year was 0.62835196. Cheung Kong Holdings, Ltd.'s gross margin of last year was 0.5411385. ==> This year's gross margin is higher. ==> Score 1.

Q9. Change in asset turnover

Compare this year’s asset turnover (total sales divided by total assets at the beginning of the year) to last year’s asset turnover ratio.

Score 1 if this year’s asset turnover ratio is higher, 0 if it’s lower

Asset Turnover (This Year)=Revenue/Total Assets at the beginning of this year (Dec12)
=2768.75483372/52460.3379337
=0.05277806

Asset Turnover (Last Year)=Revenue/Total Assets at the beginning of last year (Dec11)
=2757.51322069/48078.5879928
=0.05735429

Cheung Kong Holdings, Ltd.'s asset turnover of this year was 0.05277806. Cheung Kong Holdings, Ltd.'s asset turnover of last year was 0.05735429. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score=Q1+Q2+Q3+Q4+Q5+Q6+Q7+Q8+Q9
=1+1+1+0+1+1+0+1+0
=6

Good or high score = 8 or 9

Bad or low score = 0 or 1

Cheung Kong Holdings, Ltd. has an F-score of 6 indicating the company's financial situation is typical for a stable company.


Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


Related Terms

Net Income, Cash Flow from Operations, Revenue, Gross Profit, Total Assets, Long-Term Debt, Total Current Assets, Total Current Liabilities


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Cheung Kong Holdings, Ltd. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Q1 1110111111
Q2 0100011001
Q3 1110111101
Q4 0000000000
Q5 0101011101
Q6 0100100011
Q7 0000000000
Q8 1110000011
Q9 1010111100
F-score 4641455436
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