Key Insights

• Huajin International Holdings to hold its Annual General Meeting on 27th of June
• Salary of CN¥225.0k is part of CEO Canwen Luo's total remuneration
• The overall pay is 59% below the industry average
• Over the past three years, Huajin International Holdings' EPS grew by 33% and over the past three years, the total loss to shareholders 53%

Performance at Huajin International Holdings Limited (HKG:2738) has been rather uninspiring recently and shareholders may be wondering how CEO Canwen Luo plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 27th of June. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. In our opinion, CEO compensation does not look excessive and we discuss why.

How Does Total Compensation For Canwen Luo Compare With Other Companies In The Industry?

Our data indicates that Huajin International Holdings Limited has a market capitalization of HK$822m, and total annual CEO compensation was reported as CN¥366k for the year to December 2023. We note that's a decrease of 30% compared to last year. We note that the salary portion, which stands at CN¥225.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the Hong Kong Metals and Mining industry with market capitalizations under HK$1.6b, the reported median total CEO compensation was CN¥893k. That is to say, Canwen Luo is paid under the industry median. Moreover, Canwen Luo also holds HK$74m worth of Huajin International Holdings stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 86% of total compensation represents salary and 14% is other remuneration. Huajin International Holdings sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Huajin International Holdings Limited's Growth Numbers

Over the past three years, Huajin International Holdings Limited has seen its earnings per share (EPS) grow by 33% per year. Its revenue is up 41% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Huajin International Holdings Limited Been A Good Investment?

Few Huajin International Holdings Limited shareholders would feel satisfied with the return of -53% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders have earned a negative share price return is certainly disconcerting. This contrasts to the strong EPS growth recently however, and suggests that there may be other factors at play driving down the share price. A key focus for the board and management will be how to align the share price with fundamentals. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for Huajin International Holdings you should be aware of, and 3 of them shouldn't be ignored.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com