Tianma Microelectronics Co. Ltd. – Value Analysis (SHENZHEN:50) : November 6, 2017

Capitalcube gives Tianma Microelectronics Co. Ltd. a score of 53.

Our analysis is based on comparing Tianma Microelectronics Co. Ltd. with the following peers – Chengdu Xuguang Electronics Co., Ltd. Class A, INESA Intelligent Tech Inc. Class A, Henan Ancai Hi-Tech Co., Ltd. Class A and Shenzhen Mindata Holding Co., Ltd. Class A (600353-CN, 600602-CN, 600207-CN and 002137-CN).

Investment Outlook

Tianma Microelectronics Co. Ltd. has a fundamental score of 53 and has a relative valuation of UNDERVALUED.

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’s current Price/Book of 2.25 is about median in its peer group.
  • We classify 000050-CN as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • 000050-CN‘s relative asset efficiency and net profit margins are both around the median level.
  • Changes in annual earnings are in line with its chosen peers but lags in terms of revenue, implying the company is cost conscious and selective about spending for growth.
  • 000050-CN‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
  • While 000050-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 is likely overinvesting in a business with only median returns.
  • 000050-CN has the financial and operating capacity to borrow quickly.

Access our research and ratings on Tianma Microelectronics Co. Ltd.

Leverage & Liquidity

000050-CN has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 12.80% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 2.17%), and a well-cushioned interest coverage level of 7.64x, 000050-CN can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 4 peers for the company have an outstanding debt balance.

000050-CN has maintained its Quick & Able profile from the recent year-end.

  • 000050-CN‘s interest coverage is similar to last year’s high of 7.64x, which compares to a low of 0.18x in 2015.
  • Compared to 2016, interest coverage has remained relatively stable for both the company (7.64x) and the peer median (14.28x).
  • 000050-CN‘s debt-EV is over one standard deviation below its five-year average debt-EV of 22.13%.
  • Though its debt-EV has remained relatively stable at 12.80% compared to 2016, its peer median has increased to 2.17% from 1.23% during this period.
  • Relative to peers, debt-EV fell 0.94 percentage points.

Access the detailed analysis for Tianma Microelectronics Co. Ltd.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Chengdu Xuguang Electronics Co., Ltd. Class A 2.62 3.14 118.88 231.12
INESA Intelligent Tech Inc. Class A 1.07 2.99 109.88 222.06
Henan Ancai Hi-Tech Co., Ltd. Class A 2.17 3.38 1.64 19.7
Shenzhen Mindata Holding Co., Ltd. Class A 0.11 4.36 14.28 429.26
Tianma Microelectronics Co., Ltd Class A 12.8 1.05 7.64 55.64
Peer Median 2.17 3.14 14.28 222.06
Best In Class 0.11 4.36 118.88 429.26

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Company Profile

Tianma Microelectronics Co., Ltd. engages in the manufacturing, processing and sale of liquid crystal display (LCD) and low current module (LCM). It also engages in the provision of technological services for LCM and other new products. The company was founded on November 8, 1983 and is headquartered in Shenzhen, China.

Disclaimer

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