Shenwu Energy Saving Co., Ltd. act as a technical proposal supplier and engineering contractor in the energy conservation, environmental protection, and utilization of resources. It engages in the treatment and recovery of solid wastes and dust in the steel industry; and smelting slags from the non-ferrous industry. The company is based in Nanjing, China.

China

Shenwu Energy Saving Co., Ltd.

Industrials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

000820.SZ reported revenue of CNY 165mn in the last 12 months, down 14% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 6% from FY24 to CNY -0.04.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 32ppts and its growth decelerated by 1ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is slightly unfavourable.

Another important profitability metric, return on assets (RoA), amounted to -5.9% in the last 12 months, a decrease from -5.0% in FY23. 

Shenwu Energy Saving Co., Ltd. reported a return on equity (RoE) of -19.9% in the last 12 months, up from -22.3% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to -12.2%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -6.2 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

000820.SZ has below average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually stable and remains extremely favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. The stock has a very small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note resilient historical revenue growth, robust profitability, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, negligible return on capital, excessive margin volatility, poor working capital management, and inadequate interest coverage.

In highly turbulent market conditions, 000820.SZ is as volatile as an index. In other words, the stock will move with the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be limited. 

In normal market circumstances, 000820.SZ is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from moderate to substantial. We would also like to highlight the substantial intraday volatility of the instrument. 

From both historical and forecast perspectives, the stock is considerably overpriced compared to similar stocks. 

Shenwu Energy Saving Co., Ltd.

CN¥ 2.65

2

Shenwu Energy Saving Co., Ltd.

CN¥ 2.65

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 2.65

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