Yahoo Finance How Much is Texwinca Holdings Limited’s (HKG:321) CEO Getting Paid?
Kit Chung Ting took the helm as Texwinca Holdings Limited’s (HKG:321) CEO and grew market cap to HK$4.64b recently. Understanding how CEOs are incentivised to run and grow their company is an important aspect of investing in a stock. This is because, if incentives are aligned, more value is created for shareholders which directly impacts your returns as an investor. I will break down Ting’s pay and compare this to the company’s performance over the same period, as well as measure it against other SEHK-listed CEOs leading companies of similar size and profitability.
View our latest analysis for Texwinca Holdings
What has been the trend in 321’s earnings?
Profitability of a company is a strong indication of 321’s ability to generate returns on shareholders’ funds through corporate activities. In this exercise, I will use profits as a proxy for Ting’s performance. Over the last year 321 delivered an earnings of HK$304.33m , which is a rather significant decline from its prior year’s profit (excluding extraordinary items) of HK$478.53m. However, 321 has strived to maintain a good track record of profitability, given its average EPS of HK$0.54 over the past couple of years. During times of declining earnings, the company may be going through a period of reinvestment and growth, or it can be a sign of some headwind. Regardless, CEO compensation should emulate the current condition of the business. From the latest financial statments, Ting’s total remuneration rose by 23.24% to HK$22.79m.
Is 321 overpaying the CEO?
Despite the fact that no standard benchmark exists, as remuneration should be tailored to the specific company and market, we can determine a high-level yardstick to see if 321 deviates substantially from its peers. This exercise helps investors ask the right question about Ting’s incentive alignment. Typically, a SEHK small-cap has a value of HK$2.61B, creates earnings of HK$245M, and pays its CEO at roughly HK$3.3M annually. Based on the size of 321 in terms of market cap, as well as its performance, using earnings as a proxy, it seems that Ting is paid on a similar level to other SEHK CEOs of small-caps, on average. This may mean that 321 is appropriately compensating its CEO.
Next Steps:
In the upcoming year’s AGM, shareholders should think about whether another increase in CEO pay is justified, should the board propose an executive pay raise. Will this raise take Ting’s pay beyond the bound of reasonableness, or will it help in retaining the talented executive? Being proactive in governance decisions is a key part to investing, and collectively, investors can make a big difference. If you have not done so already, I urge you to complete your research by taking a look at the following:
Governance: To find out more about 321’s governance, look through our infographic report of the company’s board and management.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 321? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
