ESG – RONSHINE DEBT

Should You Be Pleased About The CEO Pay At Ronshine China

Holdings Limited's (HKG:3301)

Simply Wall St
May 19, 2020·3 min read

In 2014, Zonghong Ou was appointed CEO of Ronshine China Holdings Limited

(HKG:3301). First, this article will compare CEO compensation with compensation at
similar sized companies. Then we'll look at a snap shot of the business growth.
Third, we'll reflect on the total return to shareholders over three years, as a second
measure of business performance. This process should give us an idea about how
appropriately the CEO is paid.
Check out our latest analysis for Ronshine China Holdings
How Does Zonghong Ou's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Ronshine China Holdings Limited has a
market cap of HK$13b, and reported total annual CEO compensation of CN¥3.2m
for the year to December 2019. We note that's an increase of 39% above last year. It
is worth noting that the CEO compensation consists almost entirely of the salary,
worth CN¥3.1m. As part of our analysis we looked at companies in the same
jurisdiction, with market capitalizations of CN¥7.1b to CN¥23b. The median total
CEO compensation was CN¥3.7m.
Next, let's break down remuneration compositions to understand how the industry
and company compare with each other. Talking in terms of the sector, salary
represented approximately 68% of total compensation out of all the companies we
analysed, while other remuneration made up 32% of the pie. Ronshine China
Holdings has gone down a largely traditional route, paying Zonghong Ou a high
salary, giving it preference as a compensation method to non-salary benefits.
That means Zonghong Ou receives fairly typical remuneration for the CEO of a
company that size. While this data point isn't particularly informative alone, it gains
more meaning when considered with business performance. You can see a visual
representation of the CEO compensation at Ronshine China Holdings, below.

Is Ronshine China Holdings Limited Growing?

Ronshine China Holdings Limited has seen earnings per share (EPS) move
positively by an average of 23% a year, over the last three years (using a line of best
fit). In the last year, its revenue is up 50%.
Overall this is a positive result for shareholders, showing that the company has
improved in recent years. Most shareholders would be pleased to see strong
revenue growth combined with EPS growth. This combo suggests a fast growing
business. You might want to check this free visual report on analyst forecasts for
future earnings.
Has Ronshine China Holdings Limited Been A Good Investment?

Ronshine China Holdings Limited has generated a total shareholder return of 14%
over three years, so most shareholders would be reasonably content. But they would
probably prefer not to see CEO compensation far in excess of the median.
In Summary...

Remuneration for Zonghong Ou is close enough to the median pay for a CEO of a
similar sized company .
The company is growing EPS but shareholder returns have been sound but not
amazing. As a result of these considerations, I would suggest the CEO pay is
reasonable. On another note, Ronshine China Holdings has 3 warning signs (and 1
which doesn't sit too well with us) we think you should know about.

Important note: Ronshine China Holdings may not be the best stock to buy. You
might find something better in this list of interesting companies with high ROE and
low debt. CEO

Zonghong Ou (51 yo)

6.33yrs - Tenure

CN¥3,183,000

Compensation
Mr. Zonghong Ou has been Chief Executive Officer of Ronshine China Holdings
Limited since December 15, 2014. Mr. Ou is primarily responsible for the overall
development strategy and daily operation of Ronshine China Holdings Limited. He
established Rongxin Group (formerly known as Fujian Rongxin Real Estate
Development Company Limited on September 23, 2003. He joined the Ronshine
China Holdings Limited in September 2003. He established Putian Transport
Engineering Company Limited on August 1, 1995, which engaged in construction of
motorways. On April 20, 2000, he started his engagement with the property related
business and established Putian Transport and Real Estate Development Company
Limited. He has also been the managing vice president of the Federation of Fujian
Enterprise and Entrepreneur since April 2012. He has been Chairman of Ronshine
China Holdings Limited since December 1, 2014. He has been a director of Renmin
University of China since October 18, 2011. He has also assumed various positions
in the subsidiaries of Ronshine China Holdings Limited, including the sole Director of
Rongda Company Limited since September 11, 2014, the sole director of Rongtai
Company Limited since September 26, 2014, a director of Rongxin Group since
September 23, 2003, a director of Rongxin Zhangzhou Property from January 7,
2011 to February 1, 2013 and a director of Fujian Rongshengmei Business
Information Consultancy Company Limited since October 28, 2014. He was awarded
a member of the fourteenth and fifteenth sessions of the Excellent Entrepreneurs of
Fujian in December 2011 and June 2014, respectively. He also received the Silver
Award of the Ten Young Entrepreneurs of Fujian in April 2008

Compensation vs Market: Zonghong's total compensation ($USD487.46K) is about

average for companies of similar size in the Hong Kong market ($USD440.00K).
Compensation vs Earnings: Zonghong's compensation has increased by more than
20% whilst company earnings have fallen more than 20% in the past year.

Leadership Team

Name Position Tenure Compensation Ownership

Zonghong Ou Founder 6.33yrs CN¥3.18m no data

Lixin Zhang CFO & Executive Director 2.42yrs CN¥5.57m no data

Feiyan Zeng Executive Director 5.75yrs CN¥5.65m no data

Youzhi Ruan VP & Executive Director 2.42yrs CN¥5.54m 0.063%

CN¥ 5.8m

Lijuan Yu Executive Director 2.08yrs CN¥6.23m 0.010%

CN¥ 926.9k

Wing Shan Ng Joint Company Secretary 6.33yrs no data no data

Zuoyi Yu Joint Company Secretary 2.17yrs no data no data

BOARD
2.8yrs

Average Tenure
45yo
Average Age
Experienced Board: 3301's board of directors are not considered experienced ( 2.8 years average
tenure), which suggests a new board.

Dingxin is a company incorporated in the British Virgin Islands which is indirectly

whollyowned by TMF (Cayman) Ltd. as a trustee of Ou Family Trust, and Mr. Ou Zonghong
(“Mr. Ou”), an executive Director, the Chairman and a controlling shareholder of the
Company, is a beneficiary of Ou Family Trust. Following the above acquisition of Shares by
Dingxin, the shareholding of Dingxin in the Company increased to 1,072,685,411 Shares,
representing approximately 62.26% of the total issued share capital of the Company as at the
date of this announcement. Based on the information available to the Company and to the
knowledge of the Board, the Company has maintained sufficient public float of the issued
Shares following the above acquisition and as at the date of this announcemen t.