The average target price of 000885.SZ is 19 and suggests 33% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 18.9. This translates into 33% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 18.9. This suggests 33% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

City Development Environment Co., Ltd. produces and sells cement clinker and cement products in China. It also engages in the investment, construction, operation, and management of environmental and public utility and municipal projects, as well as expressways. The company was founded in 1998 and is based in Zhengzhou, China.

China

CEVIA Enviro Inc.

Industrials

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, and there is a clear trend. In the past 12 months, the dividend yield has been good and slightly above its peers. On average, the company pays dividends annually. 

000885.SZ reported revenue of CNY 6 769mn in the last 12 months, up 3% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 4% from FY24 to CNY 1.86. Market expects EPS to reach CNY 1.61 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 6ppts over past six months and grown 3ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 36.7% in the last 12 months, a decline from 43.4% in FY23. 

Historically, 000885.SZ has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 17.6%, a growth from 16.5% in FY23. 

CEVIA Enviro Inc. reported a return on equity (RoE) of 14.7% in the last 12 months, down from 15.3% in FY23. The market consensus projects an RoE of 12.1% in FY24, again ahead of its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to 5.1%, below the peers. The consensus estimate for FY24 for RoCE is 5.9%, again behind the peers. 

Another important profitability metric, return on assets (RoA), amounted to 4.0% in the last 12 months, an increase from 3.9% in FY23. The market analysts predict that RoA will be 2.8% in FY24, again weaker than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.6 in the past several years. This ratio implies a good 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.

000885.SZ boasts high trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually quite 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. 

No other major risks have been identified.

The risk of default is moderate. We note robust profitability, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, excessive margin volatility, poor working capital management, weak debt servicing capacity, and an unfavourable capital structure.

In highly turbulent market conditions, 000885.SZ is not volatile. In other words, the stock will fall far less than 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 very low. 

In normal market circumstances, 000885.SZ is not volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will stay within a narrow range. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to negligible. We would also like to highlight the negligible intraday volatility of the instrument. 

Considering past and projected metrics, the stock is slightly 'cheaper' than its peers. Specifically, the stock is 'cheap' on P/E, undervalued on EV/EBITDA, overpriced on P/FCF. 

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CEVIA Enviro Inc.

CN¥ 14.11

6

CEVIA Enviro Inc.

CN¥ 14.11

6

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 14.11

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