China Information Technology Development Limited (NASDAQ:CNIT) has moved to NEUTRAL from UNDERVALUED
It has a Fundamental Analysis Score of 9 and a CapitalCube Implied Price of HKD 0.15
Relative Valuation
China Information Technology Development Limited is currently neutrally valued, as its previous close of HKD 0.14 lies within the CapitalCube estimate range of HKD 0.13 to HKD 0.16. Over the last 52 week period, China Information Technology Development Limited has fluctuated between HKD 0.11 and HKD 0.21.
Company Overview
- Relative underperformance over the last year is in contrast with the more recent outperformance.
- China Information Technology Development Limited's current Price/Book of 3.04 is about median in its peer group.
- 8178-HK's earnings and EBITDA are both negative which suggest that P/E or Price/EBITDA are not meaningful to make this analysis between operating advantage (ROE) and growth expectations (as suggested by P/E or P/EBITDA).
- 8178-HK's relatively low net margins and poor asset turns suggest a problematic operating strategy.
- Compared with its chosen peers, the company's annual revenues and earnings change at a slower rate, implying a lack of strategic focus and/or lack of execution success.
- 8178-HK's return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
- The company's median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
- 8178-HK's earnings and EBITDA are both negative which suggest that P/E or Price/EBITDA are not meaningful for an analysis between historical growth (using annualized three-year revenue growth) and investor growth expectations (as suggested by P/E or Price/EBITDA) .
- The company's relatively low level of capital investment and below peer median returns on capital suggest that the company is in maintenance mode.
- 8178-HK's operating performance may not allow it to raise additional debt.
Investment Outlook
China Information Technology Development Limited has a fundamental score of 9 and has a relative valuation of NEUTRAL.
China Information Technology Development Limited lies at the bottom left quadrant of CapitalCube's Value – Price Matrix. We call this space a Value Trap. At this level, China Information Technology Development Limited is potentially undervalued, since it trades lower than its CapitalCube Implied price of 0.15. However, its fundamental analysis score is also on the lower side at 9, begging the question whether the low price is on account of the weaker fundamentals.
Drivers of Valuation
8178-HK's earnings and EBITDA are both negative.
8178-HK's earnings and EBITDA are both negative which suggest that P/E or Price/EBITDA are not meaningful to make this analysis between operating advantage (ROE) and growth expectations (as suggested by P/E or P/EBITDA).
The company's current Price/Book of 3.04 is about median in its peer group.
Peer Analysis
A complete list of valuation metrics is available on the company page.
Company Profile
China Information Technology Development Ltd. operates as an investment holding company, which engages in the development and sale of computer software and hardware. It operates through the following business segments: Software Development and System Integration & In-house Developed Products. The Software Development and System Intergration segment engages in the sale of computer hardware; provision of software development services and provision of technical support and maintenance services. The In-house Developed Products segment engages in the lease of in-house developed computer hardware. The company was founded on May 24, 2001 and is headquartered in Hong Kong.
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