Shanxi Changcheng Microlight Equipment Co. Ltd. Class H : An expensive stock today?

Shanxi Changcheng Microlight Equipment Co. Ltd. Class H moves from NEUTRAL to OVERVALUED

It has a Fundamental Analysis Score of 22 and a CapitalCube Implied Price of  0.34 HKD

Relative Valuation

Shanxi Changcheng Microlight Equipment Co. Ltd. Class H’s price of HKD 0.44 is greater than CapitalCube’s implied price of HKD 0.30. At this level, CapitalCube believes that Shanxi Changcheng Microlight Equipment Co. Ltd. Class H is overvalued. Over the last 52 week period, the stock has fluctuated between HKD 0.32 and HKD 0.86.

Relative Valuation

Company Overview

  • Relative under performance over the last year has improved more recently.
  • Shanxi Changcheng Microlight Equipment Co. Ltd. Class H trades at a lower Price/Book multiple (0.47) than its peer median (1.17).
  • 8286-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).
  • 8286-HK’s relatively low net margins and poor asset turns suggest a problematic operating strategy.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • 8286-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.
  • 8286-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.
  • 8286-HK’s operating performance may not allow it to raise additional debt.

Investment Outlook

Shanxi Changcheng Microlight Equipment Co. Ltd. Class H has a fundamental score of 22 and has a relative valuation of OVERVALUED.

Shanxi Changcheng Microlight Equipment Co. Ltd. Class H is on the bottom right quadrant of CapitalCube’s Value – Price Matrix. We therefore classify Shanxi Changcheng Microlight Equipment Co. Ltd. Class H as ‘Speculative’. In other words, not only is Shanxi Changcheng Microlight Equipment Co. Ltd. Class H’s Fundamental Analysis Score low at 22, but it is also potentially overvalued, in that it trades at a price higher than its CapitalCube Implied Price of 0.30.

Fundamentals Vs Relative Valuation

Drivers of Valuation

8286-HK’s earnings and EBITDA are both negative.

8286-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 trades at a lower Price/Book multiple of 0.47 compared to its peer median of 1.17.

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

Shanxi Changcheng Microlight Equipment Co. Ltd. engages in the design, research, development, manufacture, and sale of image transmission fiber optic products. The firm produces and sells fiber optic straight plates, fiber optic face plates, fiber optic tapers, fiber optic tapers billets, and microchannel plates. It operates through the following geographical segments: The PRC, Hong Kong, Europe, and Others. The company was founded in 1958 and is headquartered in Taiyuan, China.

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