Hollysys Automation Technologies, Ltd. (HOLI) Company Bio
HollySys Automation Technologies Ltd. provides automation and control technologies and products to customers in industrial, railway, subway, nuclear power, building retrofit, and mechanical and electronic industries primarily in China, Hong Kong, Southeast Asia, and the Middle East. The company was founded in 1993 and is based in Beijing, China.
HOLI Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Hollysys Automation Technologies Ltd with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Hollysys Automation Technologies Ltd ranked in the 73th percentile in terms of potential gain offered. Specifically, our DCF analysis implies the stock is trading below its fair value by an estimated 278.17%. As for the metrics that stood out in our discounted cash flow analysis of Hollysys Automation Technologies Ltd, consider:
The company's debt burden, as measured by earnings divided by interest payments, is 319.85; that's higher than 98.24% of US stocks in the Industrials sector that have positive free cash flow.
The business' balance sheet reveals debt to be 3% of the company's capital (with equity being the remaining amount). Approximately merely 11.1% of US stocks with free cash flow have a lower reliance on debt in their capital structure.
HOLI's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 47.5% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Industrials that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as HOLI, try MHH, EML, ATI, RGP, and TISI.
I've complained in the past that HollySys (HOLI) is not exactly "shareholder-friendly" even by the standards of publicly-traded Chinese companies. To illustrate this point, the company removed its CEO and Chairman back in July, but you wouldn't know that from the company website; to the best I can find (in...
Stephen Simpson, CFA on Seeking Alpha | August 14, 2020
HollySys ([[HOLI]] -2.3%) Q4 revenues was $129.2M, a decrease of 17.7% vs. Q2 2019, misses analyst estimates by $18.53M.Revenue breakup: Industrial automation-55.6%, Tail transportation automation- 38.1%, Mechanical and electrical solution-6.3%.Gross margin was at 44.7%, compared to 34% last year.Non-GAAP net income was $2.2M.Non-GAAP diluted EPS was at $0.04, a decrease of...
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