The average target price of 002170.SZ is 7.7 and suggests 26% downside potential. Usually, this means a SELL recommendation among investment firms, or a recommendation to decrease one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 7.7. This is lower than the current market price, meaning that even the most optimistic analyst does not see upside potential. On the other hand, the most pessimistic analyst has a target price of 7.7. This is equivalent to 26% downside potential in the worst case. 

Shenzhen Batian Ecotypic Engineering Co., Ltd. engages in the research, production, and sale of compound fertilizers in the People's Republic of China. It offers nitro phosphate fertilizers. The company was founded in 1989 and is headquartered in Shenzhen, China.

China

Shenzhen Batian Ecotypic Engineering Co., Ltd.

Basic Materials

The company pays dividends most of the time. It has paid dividends in almost every one of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been moderate and on par with its peers. On average, the company pays dividends annually. 

002170.SZ reported revenue of CNY 3 757mn in the last 12 months, up 14% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 26% from FY24 to CNY 0.58. Market expects EPS to reach CNY 0.51 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 30ppts over past six months and grown 4ppts slower 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 positive. Usually, this means that a fairly valued or slightly undervalued stock has become more 'expensive', indicating that the market, in general, may have gained short-term confidence in the stock.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 20.2% in the last 12 months, up from 16.1% in FY23. 

Historically, 002170.SZ has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 14.0%, a growth from 8.0% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 9.0% in the last 12 months, an increase from 5.2% in FY23. The market analysts predict that RoA will be 3.3% in FY24, though below its peers in this period. 

Shenzhen Batian Ecotypic Engineering Co., Ltd. reported a return on equity (RoE) of 18.1% in the last 12 months, up from 11.2% in FY23. The market consensus projects an RoE of 7.3% in FY24, however, this time below its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 15.5%, above the peers. The consensus estimate for FY24 for RoCE is 8.5%, however, this time below its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 2.0 in the past several years. This ratio implies a strong 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.

002170.SZ boasts high trading liquidity. The average private investor can sell his common position in the stock 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 adequate interest coverage and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to weak positions in its industry, poor working capital management.

In highly turbulent market conditions, 002170.SZ is not overly volatile. In other words, the stock will fall 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 low. 

In normal market circumstances, 002170.SZ is as volatile as an index. Put differently, without outstanding market volatility or shocking company news, the stock's price will move with the index. The stock's losses on its worst days (less than 1-5% of the time) will range from limited to average. We would also like to highlight the average intraday volatility of the instrument. 

Considering past and projected metrics, the stock is neither 'expensive' nor 'cheap' compared to its peers. In particular, the stock is underpriced on P/E, of fair value on EV/EBITDA, trading at neutral levels on P/FCF. 

Shenzhen Batian Ecotypic Engineering Co., Ltd.

CN¥ 10.14

5

Shenzhen Batian Ecotypic Engineering Co., Ltd.

CN¥ 10.14

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 10.14

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