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Geotech Holdings (HKSE:01707) Probability of Financial Distress (%) : 0.18% (As of Dec. 12, 2024)


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What is Geotech Holdings Probability of Financial Distress (%)?

Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, Geotech Holdings's Probability of Financial Distress (%) is 0.18%.

Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.


Competitive Comparison of Geotech Holdings's Probability of Financial Distress (%)

For the Engineering & Construction subindustry, Geotech Holdings's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Geotech Holdings's Probability of Financial Distress (%) Distribution in the Construction Industry

For the Construction industry and Industrials sector, Geotech Holdings's Probability of Financial Distress (%) distribution charts can be found below:

* The bar in red indicates where Geotech Holdings's Probability of Financial Distress (%) falls into.



Geotech Holdings Probability of Financial Distress (%) Calculation

Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.

The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:

LPFD= -20.12 * NIMTAAVG + 1.60 * TLMTA - 7.88 * EXRETAVG + 1.55 * SIGMA - 0.005 * RSIZE - 2.27 * CASHMTA + 0.070 * MB - 0.09 * PRICE -8.87
=-6.34

The Probability of Financial Distress (%) (PFD) was then obtianed by:

PFD=1/(1 + e^(-LPFD))*100%
=0.18%

The eight explanatory variables are:

1. NIMTAAVG = Net Income to Market Total Assets

NIMTAAVG=Net Income / Market Total Assets
=Net Income / (Market Cap + Total Liabilities)

*Note that for companies reported quarterly, geometrically declining weighted quarterly Net Income data in latest four quarters are used.

2. TLMTA = Total liabilities to Market Total Assets

TLMTA=Total Liabilities / Market Total Assets

3. CASHMTA = Cash to Market Total Assets

For non-financial companies, CASHMTA is measured as:

CASHMTA=Cash, Cash Equivalents, Marketable Securities / Market Total Assets

4. EXRETAVG = Excess Return compared to the S&P 500

EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.

5. SIGMA = Standard Deviation of Daily Returns

For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).

6. RSIZE = Relative Size

RSIZE=log (Market Cap / Total Market Cap of S&P 500 companies)

7. MB = Market to Adjusted Book Equity Ratio


8. PRICE

PRICE is measured as the log of the stock price, capped at log(15).


Geotech Holdings  (HKSE:01707) Probability of Financial Distress (%) Explanation

Like the Altman Z-Score, the PFD measures a company's bankruptcy risk in the upcoming year. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.


Geotech Holdings Probability of Financial Distress (%) Related Terms

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Geotech Holdings Business Description

Industry
Traded in Other Exchanges
N/A
Address
223 Hing Fong Road, Unit 706-708, 7th Floor, Tower II, Metroplaza, Kwai Chung, New Territories, Hong Kong, HKG
Geotech Holdings Ltd is an investment holding company. The firm is engaged in the provision of construction and engineering services and property-related services sales of luxury products. It is principally engaged in the slope works in Hong Kong as the main contractor. It mainly operates in three segments; Construction and engineering services; Property-related services; and Sales of luxury products. The group undertakes slope works as the main contractor and undertakes ground investigation field works as a subcontractor. It derives the majority of its revenue from Hong Kong. The Construction and engineering services segment derives key revenue for the firm.
Executives
Chen Zhi 2201 Interest of corporation controlled by you
Star Merit Global Limited 2101 Beneficial owner
Cheung Ting Kam 2201 Interest of corporation controlled by you

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