Chongqing Fuling Electric Power Co., Ltd. – Value Analysis (SHANGHAI:600452) : October 5, 2017

Capitalcube gives Chongqing Fuling Electric Power Co., Ltd. a score of 69.

Our analysis is based on comparing Chongqing Fuling Electric Power Co., Ltd. with the following peers – Sichuan Minjiang Hydropower Co., Ltd. Class A, Guangxi Guidong Electric Power Co. Ltd. Class A, Chongqing Three Gorges Water Conservancy and Electric Power Co., Ltd. Class A, Sichuan Xichang Electric Power Co., Ltd. Class A, Guangdong Electric Power Development Co., Ltd Class B, Guizhou Qianyuan Power Co., Ltd. Class A, Fujian Mindong Electric Power Co., Ltd. Class A, Guangdong Shaoneng Group Co., Ltd. Class A and Guangxi Guiguan Electric Power Co., Ltd. Class A (600131-CN, 600310-CN, 600116-CN, 600505-CN, 200539-CN, 002039-CN, 000993-CN, 000601-CN and 600236-CN).

Investment Outlook

Chongqing Fuling Electric Power Co., Ltd. has a fundamental score of 69 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Considering peers, relative outperformance over the last year and the last month suggest a leading position.
  • It currently trades at a Price/Book ratio of (6.54).
  • We classify 600452-CN as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • 600452-CN has a successful operating model with relatively high net profit margins and asset turns.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • 600452-CN‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively low gross margin and median pre-tax margin suggest operations may be constrained on pricing versus peers.
  • While 600452-CN‘s revenues growth in recent years has been around the peer median, the stock’s below peer median P/E ratio suggests that the market likely sees the company’s long-term growth prospects to be fading.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • 600452-CN has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

600452-CN has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 11.40% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 31.95%), and a well-cushioned interest coverage level of 10.71x, 600452-CN can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 9 peers for the company have an outstanding debt balance.

600452-CN has maintained its Quick & Able profile from the recent year-end.

  • 600452-CN‘s interest coverage is downward trending and is below (but within one standard deviation of) its five-year average interest coverage of 305.57x.
  • Though its interest coverage decreased to 10.71x from 17.91x (in 2016), its peer median remained relatively stable during this period at 2.56x.
  • Interest coverage fell 6.77 points relative to peers.
  • 600452-CN‘s debt-EV continues to trend upward and is above (but within one standard deviation of) its five-year average debt-EV of 7.31%.
  • The increase in its debt-EV to 11.40% from 10.54% (in 2016) was also accompanied by an increase in its peer median during this period to 31.95% from 24.59%.
  • Relative to peers, debt-EV fell 6.49 percentage points. Unlike the peer median, it is also below the 25% leverage benchmark.

Access the detailed analysis for Chongqing Fuling Electric Power Co., Ltd.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Sichuan Minjiang Hydropower Co., Ltd. Class A 21 0.41 1 24.27
Guangxi Guidong Electric Power Co. Ltd. Class A 60.32 0.94 0.87 7.39
Chongqing Three Gorges Water Conservancy and Electric Power Co., Ltd. Class A 9.2 0.93 5.75 39
Sichuan Xichang Electric Power Co., Ltd. Class A 15.8 0.55 3.54 39.3
Guangdong Electric Power Development Co., Ltd Class B 66.93 0.64 1.46 18.4
Guizhou Qianyuan Power Co., Ltd. Class A 66.77 0.59 1.23 10.16
Fujian Mindong Electric Power Co., Ltd. Class A 32.67 0.9 2.17 16.89
Guangdong Shaoneng Group Co., Ltd. Class A 31.23 0.89 4.32 28.1
Guangxi Guiguan Electric Power Co., Ltd. Class A 40.71 0.49 2.95 20.36
Chongqing Fuling Electric Power Industrial Co Ltd Class A 11.4 0.36 10.71 84.83
Peer Median 31.95 0.61 2.56 22.31
Best In Class 9.2 0.94 10.71 84.83

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Company Profile

Chongqing Fuling Electric Power Co., Ltd. engages in the marketing and supply of electricity. Its business activities include the development of power resources; provision of information consulting services; and sale and distribution of control equipment, electrical equipment, machinery, hardware, adhesives, and building materials. The company was founded in December 28, 1999 and is headquartered in Chongqing, China.

Disclaimer

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