Key Insights

• Shing Chi Holdings will host its Annual General Meeting on 19th of March
• Total pay for CEO Chi Keung Lau includes HK$1.85m salary
• The total compensation is similar to the average for the industry
• Shing Chi Holdings' three-year loss to shareholders was 97% while its EPS grew by 19% over the past three years

In the past three years, the share price of Shing Chi Holdings Limited (HKG:1741) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 19th of March. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

Comparing Shing Chi Holdings Limited's CEO Compensation With The Industry

Our data indicates that Shing Chi Holdings Limited has a market capitalization of HK$51m, and total annual CEO compensation was reported as HK$2.1m for the year to September 2024. That's a modest increase of 6.3% on the prior year. Notably, the salary which is HK$1.85m, represents most of the total compensation being paid.

On comparing similar-sized companies in the Hong Kong Construction industry with market capitalizations below HK$1.6b, we found that the median total CEO compensation was HK$2.2m. From this we gather that Chi Keung Lau is paid around the median for CEOs in the industry.

Speaking on an industry level, nearly 84% of total compensation represents salary, while the remainder of 16% is other remuneration. Shing Chi Holdings is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Shing Chi Holdings Limited's Growth Numbers

Shing Chi Holdings Limited's earnings per share (EPS) grew 19% per year over the last three years. In the last year, its revenue is down 19%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Shing Chi Holdings Limited Been A Good Investment?

The return of -97% over three years would not have pleased Shing Chi Holdings Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 3 warning signs for Shing Chi Holdings that investors should be aware of in a dynamic business environment.

Switching gears from Shing Chi Holdings, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.