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Smart City Development Holdings (HKSE:08268) Probability of Financial Distress (%) : 0.14% (As of Apr. 14, 2025)


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What is Smart City Development 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, Smart City Development Holdings's Probability of Financial Distress (%) is 0.14%.

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 Smart City Development Holdings's Probability of Financial Distress (%)

For the Engineering & Construction subindustry, Smart City Development 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.

Smart City Development Holdings's Probability of Financial Distress (%) Distribution in the Construction Industry

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

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


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Smart City Development 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
=-6.56

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

PFD=1/(1 + e^(-LPFD))*100%
=0.14%

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

MB=Market Cap / Adjusted Book Equity
=Market Cap / (Total Stockholders Equity + 0.1 * ( Market Cap - Total Stockholders Equity))

8. PRICE

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

Smart City Development Holdings  (HKSE:08268) 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.

Smart City Development Holdings Probability of Financial Distress (%) Related Terms

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Smart City Development Holdings Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Industrials » Construction » Smart City Development Holdings Ltd (HKSE:08268) » Definitions » Probability of Financial Distress (%)
Comparable Companies
HKSE:02663 HKSE:08360 HKSE:08023 HKSE:08316 HKSE:01459 HKSE:00871 HKSE:01547 HKSE:01707 HKSE:01582 HKSE:02132 XPAR:DG NSE:LT PWR SHSE:601668 TSX:WSP SHSE:601390 HKSE:01800 EME XPAR:EN J
Traded in Other Exchanges
N/A
Address
No. 57 Hung To Road, 11th Floor, Nanyang Plaza, Kwun Tong, Kowloon, Hong Kong, HKG
Website
https://www.smartcity-d.com
Smart City Development Holdings Ltd is involved in securities investment, money lending, property investment and construction business sectors. The company has four segments: the construction segment, which is the key revenue-generating business, involves various processes including, building construction works, electrical and mechanical engineering works and fitting-out works; the securities investment segment is engaged in investment in securities; the property investment business segment is engaged in the holding of investment properties; and the money lending business segment. It has a business presence in Hong Kong and Mainland China.
Executives
Masan Capital Limited 2102 Investment manager
Masan Multi Strategy Fund Spc - Masan Hk Equity Fund Sp 2101 Beneficial owner
Top Lion International Limited 2201 Interest of corporation controlled by you
Ngan Chun Wing
Capital Vc Limited 2201 Interest of corporation controlled by you
Ethnocentric Investment Limited 2201 Interest of corporation controlled by you
Like Capital Limited 2101 Beneficial owner
Energy Luck Limited 2101 Beneficial owner
Wong Kui Shing, Danny 2201 Interest of corporation controlled by you

Smart City Development Holdings Headlines

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