Walvax Biotechnology Co., Ltd. – Value Analysis (SHENZHEN:300142) : January 3, 2017

Capitalcube gives Walvax Biotechnology Co., Ltd. a score of 16.

Our analysis is based on comparing Walvax Biotechnology Co., Ltd. with the following peers – Hualan Biological Engineering Inc. Class A, Staidson (Beijing) Biopharmaceuticals Co. Ltd. Class A, Tianjin Ringpu Bio-technology Co., Ltd. Class A and Beijing Tiantan Biological Products Corporation Limited Class A (002007-CN, 300204-CN, 300119-CN and 600161-CN).

Investment Outlook

Walvax Biotechnology Co., Ltd. has a fundamental score of 16 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • From a peer analysis perspective, relative outperformance last month is up from a median performance last year.
  • Walvax Biotechnology Co., Ltd. Class A’s current Price/Book of 6.10 is about median in its peer group.
  • 300142-CN‘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).
  • 300142-CN‘s relatively low net margins and poor asset turns suggest a problematic operating strategy.
  • 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.
  • 300142-CN‘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 relatively low gross and pre-tax margins suggest a non-differentiated product portfolio and not much control on operating costs relative to peers.
  • 300142-CN‘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 seems to be over-investing in a business with median returns.
  • 300142-CN‘s operating performance may not allow it to raise additional debt.

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Leverage & Liquidity

300142-CN would seem to have a hard time raising additional debt.

  • With debt at a relatively low 11.43% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 3.18%), and relatively tight interest coverage level of -6.69x, 300142-CN would have a hard time raising much additional debt. Thus, the company is classified as having Limited Flexibility when it comes to raising more debt.
  • Of the 4 chosen peers for the company, only 3 of the stocks have an outstanding debt balance. Companies with no debt include 002007-CN.

300142-CN has maintained its Constrained profile from the recent year-end.

  • 300142-CN‘s interest coverage is its lowest relative to the last five years and compares to a high of 62.63x in 2011.
  • The decrease in its interest coverage to -6.69x from -1.52x (in 2015) was also accompanied by a decrease in its peer median during this period to 21.58x from 23.95x.
  • Interest coverage fell 2.79 points relative to peers. It is also below the 2.50x coverage benchmark unlike the peer median.
  • 300142-CN‘s debt-EV is less than (but within one standard deviation of) its five-year average debt-EV of 12.87%.
  • The increase in its debt-EV to 11.43% from 9.83% (in 2015) was also accompanied by an increase in its peer median during this period to 3.18% from 2.01%.

Access the detailed analysis for Walvax Biotechnology Co., Ltd.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Hualan Biological Engineering Inc. Class A 0 15.43 3646.03 999
Staidson (Beijing) Biopharmaceuticals Co. Ltd. Class A 0.08 4.55 282.86 726.55
Tianjin Ringpu Bio-technology Co., Ltd. Class A 3.18 2.31 21.58 69.43
Beijing Tiantan Biological Products Corporation Limited Class A 11.22 1.46 3.64 6.13
Walvax Biotechnology Co., Ltd. Class A 11.43 0.8 -6.69 -7.8
Peer Median 3.18 2.31 21.58 69.43
Best In Class 0.08 15.43 3646.03 999

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Company Profile

Walvax Biotechnology Co., Ltd. is a biopharmaceutical company, engages in the research and development, production, and sale of human vaccine products. The company specialized in haemophilus influenzae type b conjugate vaccine (hib) in vials and pre-encapsulation type; and lyophilized AC meningococcal polysaccharide conjugate vaccine. The company was founded on January 16, 2001 and is headquartered in Kunming, China.

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