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Zhuguang Holdings Group Co (HKSE:01176) Earnings Power Value (EPV) : HK$-0.07 (As of Dec23)


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What is Zhuguang Holdings Group Co Earnings Power Value (EPV)?

As of Dec23, Zhuguang Holdings Group Co's earnings power value is HK$-0.07. *

* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.

Margin of Safety is N/A.

The basic concept of EPV is that one should value a stock based on the current free cash flow of a company and not on future projections which may, or may not, come true. It is arguably a better way to analyze stocks than Discounted Cash Flow analysis that relies on highly speculative growth assumptions many years into the future. Assumption: Current profitability is sustainable.


Zhuguang Holdings Group Co Earnings Power Value (EPV) Historical Data

The historical data trend for Zhuguang Holdings Group Co's Earnings Power Value (EPV) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Zhuguang Holdings Group Co Earnings Power Value (EPV) Chart

Zhuguang Holdings Group Co Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Earnings Power Value (EPV)
Get a 7-Day Free Trial Premium Member Only Premium Member Only -1.52 -1.29 -1.52 -0.90 -0.07

Zhuguang Holdings Group Co Semi-Annual Data
Dec14 Jun15 Dec15 Jun16 Dec16 Jun17 Dec17 Jun18 Dec18 Jun19 Dec19 Jun20 Dec20 Jun21 Dec21 Jun22 Dec22 Jun23 Dec23 Jun24
Earnings Power Value (EPV) Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only - -0.90 - -0.07 -

Competitive Comparison of Zhuguang Holdings Group Co's Earnings Power Value (EPV)

For the Real Estate Services subindustry, Zhuguang Holdings Group Co's Earnings Power Value (EPV), along with its competitors' market caps and Earnings Power Value (EPV) 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.


Zhuguang Holdings Group Co's Earnings Power Value (EPV) Distribution in the Real Estate Industry

For the Real Estate industry and Real Estate sector, Zhuguang Holdings Group Co's Earnings Power Value (EPV) distribution charts can be found below:

* The bar in red indicates where Zhuguang Holdings Group Co's Earnings Power Value (EPV) falls into.



Zhuguang Holdings Group Co Earnings Power Value (EPV) Calculation

Earnings Power Value also known as just Earnings Power is a valuation technique popularised by Bruce Greenwald, an authority on value investing at Columbia University. It is arguably a better way to analyze stocks than Discounted Cash Flow analysis that relies on highly speculative growth assumptions many years into the future.

The basic concept of EPV is that one should value a stock based on the current free cash flow of a company and not on future projections which may, or may not, come true. This valuation tool excludes the potential growth that a company may have so that needs to be looked at separately. Since future growth is excluded from the analysis, only the maintenance capital expenditures are subtracted from after-tax EBIT (earnings before interest and taxes) and growth capex is ignored.

Zhuguang Holdings Group Co's "Earning Power" Calculation:

Average of Last 5 Years Last Year
Revenue 3,715
DDA 20
Operating Margin % 47.54
SGA * 25% 114
Tax Rate % 31.05
Maintenance Capex 100
Cash and Cash Equivalents 21
Short-Term Debt 8,512
Long-Term Debt 5,337
Shares Outstanding (Diluted) 7,226

1. Start with "Earnings" not including accounting adjustments (one-time charges not excluded unless policy has changed). "Earnings" are "Operating Income.

2. Look at average margins over a business/Industry cycle: Average Operating Margin = 47.54%

To normalize margins and eliminate the effects on profitability of valuing the firm at different points in the business cycle, it is usually best to take a long-term average of operating margins. Ideally this would be as long as 10 years and include at least one economic downturn. However, since most of companies do not have as long as 10-year history, here GuruFocus uses the latest 5 years data to do the calculation. To smooth out unusual years but reflect recent developments, we take an average of the 5 year margin.

3. Multiply average margins by sustainable revenues and then adjust for maintenance SGA. This yields "normalized" EBIT:

To be conservative, GuruFocus uses an average of the 5 year revenues as the sustainable revenue.
EPV analysis recognises that part of SG&A expenditure is made to maintain and replace the existing assets, while part is made to grow sales. Since EPV is only interested in what it costs a going concern to maintain its existing asset base, it adds back a percentage of SG&A (between 15% and 50% - this is a matter of judgment and industry knowledge) to make up for the fact that some of this expenditure went to fund growth and shouldn't be accounted for. To start off, we assume 25% for the sake of prudence.
Sustainable Revenue = HK$3,715 Mil, Average Operating Margin = 47.54%, Average Adjusted SGA = 114,
therefore "Normalized" EBIT = Sustainable Revenue * Average Operating Margin + Average Adjusted SGA = 3,715 * 47.54% +114 = HK$1879.408671744 Mil.

4. Multiply by one minus Average Tax Rate (NOPAT):

Same as average operating margin calculation, GuruFocus takes an average of the 5 years tax rates.
Average Tax Rate = 31.05%, and "Normalized" EBIT = HK$1879.408671744 Mil,
therefore After-tax "Normalized" EBIT = "Normalized" EBIT * ( 1 - Average Tax Rate ) = 1879.408671744 * ( 1 - 31.05% ) = HK$1295.8898673409 Mil.

5. Add back Excess Depreciation (after tax at 1/2 average tax rate). This yields "normalized" Earnings:

Excess Depreciation = Average DDA * % of Excess Depreciation (after tax at 1/2 average tax rate) = 20 * 0.5 * 31.05% = HK$3.161431552 Mil.
"Normalized" Earnings = After-tax "Normalized" EBIT + Excess Depreciation = 1295.8898673409 + 3.161431552 = HK$1299.0512988929 Mil.

6. Adjusted for Maintenance Capital Expenditure:

First, calculate the revenue change regarding to the previous year. If the revenue decreased from the previous year, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
Second, if the revenue increased from the previous year, then calculate the percentage of Net PPE as of corresponding Revenue.
Third, calculate Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase.
If [Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase] was negative, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
If [Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase] was positive, then the Maintenance Capital Expenditure = Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase.
Fourth, GuruFocus uses an average of the 5 year maintenance capital expenditures as maintenance CAPEX.
Zhuguang Holdings Group Co's Average Maintenance CAPEX = HK$100 Mil *.
* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.

7. Investors require a return of "WACC" for the risk they are taking: WACC = 9%

8. Zhuguang Holdings Group Co's current cash and cash equivalent = HK$21 Mil.
Zhuguang Holdings Group Co's current interest bearing debt = Long-Term Debt & Capital Lease Obligation + Short-Term Debt & Capital Lease Obligation = 5,337 + 8,512 = HK$13848.797 Mil.
Zhuguang Holdings Group Co's current Shares Outstanding (Diluted Average) = 7,226 Mil.

Zhuguang Holdings Group Co's Earnings Power Value (EPV) for Dec23 is calculated as:

EPV = ( ( Norm. Earnings-Maint. CAPEX *) / WACC + CashandEquiv - Int. Bearing Debt ) / Shares Outstanding (Diluted Average)
= ( ( 1299.0512988929 - 100)/ 9%+21-13848.797 )/7,226
=-0.07

Margin of Safety (EPV)=( Earnings Power Value (EPV)-Current Price )/Earnings Power Value (EPV)
=( -0.070151625634701-0.105 )/-0.070151625634701
= N/A

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.


Zhuguang Holdings Group Co  (HKSE:01176) Earnings Power Value (EPV) Explanation

Assumption: Current profitability is sustainable.

Earnings power value (EPV) uses a very basic equation which assumes no growth, although it does rely on an assumption about the cost of capital as well as the fact that current earnings are sustainable. It also involves several adjustments to clean up the underlying Earnings figures.


Be Aware

Though using today's earnings in calculating Earnings Power Value, GuruFocus is normalizing these earnings to the business cycle. This eliminates the effects on profitability of valuing the firm at different points in the business cycle. This means that we are considering the average earnings over 5 years.


Zhuguang Holdings Group Co Earnings Power Value (EPV) Related Terms

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Zhuguang Holdings Group Co Business Description

Traded in Other Exchanges
N/A
Address
8 Finance Street, Room 5702-5703, 57th Floor, Two International Finance Centre, Central, Hong Kong, HKG
Zhuguang Holdings Group Co Ltd engages in property development, property investment, project management, and other property development-related services in the People's Republic of China. The company's core investment projects take place in tier-one and tier-two cities in China. The group's key projects include Zhuguang Yujing Scenic Garden, Pearl Yijing, Pearl Tianhu Yujing Garden, Zhuguang Financial Town One, Pearl Xincheng Yujing, and many others. The sale of properties from the Property Development Segment is responsible for the majority of the company's revenue. The company earns its revenue in both Hong Kong and Mainland China.
Executives
Rong De Investments Limited 2101 Beneficial owner
Liao Tengjia 2201 Interest of corporation controlled by you
Chu Hing Tsung 2201 Interest of corporation controlled by you
Quan Xing Holdings Limited 2101 Beneficial owner
Cheung Fong Wing 2201 Interest of corporation controlled by you
China Orient Asset Management Co., Ltd.
Ying Ri You Xian Gong Si 2101 Beneficial owner
Zhong Guo Nong Ye Yin Xing Gu Fen You Xian Gong Si 2201 Interest of corporation controlled by you
Nong Yin Guo Ji Tou Zi Guan Li You Xian Gong Si 2201 Interest of corporation controlled by you
Nong Yin Guo Ji Kong Gu You Xian Gong Si 2201 Interest of corporation controlled by you
Central Huijin Investment Ltd. 2201 Interest of corporation controlled by you
The Bank Of New York Mellon Corporation 2201 Interest of corporation controlled by you
China Cinda Asset Management Co., Ltd. 2201 Interest of corporation controlled by you
China Cinda (hk) Holdings Company Limited 2201 Interest of corporation controlled by you
China Cinda (hk) Asset Management Co., Limited 2201 Interest of corporation controlled by you

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