Jinghua Pharmaceutical Group Co., Ltd. engages in the research and development, manufacture, and sale of APIs and pharmaceutical intermediates in China. Its primary products include Phenylbutazone, Primidone, Phenobarbital, Fluorouracil, Propylthiouracil, Piroxicam, and Flucytosine APIs. The company was formerly known as Nantong Jinghua Pharmaceutical Co., Ltd. Jinghua Pharmaceutical Group Co., Ltd. was founded in 1957 and is based in Nantong, China.

China

Jinghua Pharmaceutical Group Co., Ltd.

Healthcare

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 low and below its peers. On average, the company pays dividends annually. 

002349.SZ reported revenue of CNY 1 393mn in the last 12 months, up 0% from FY24. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 4% from FY24 to CNY 0.25.

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). Over the past six months the stock has exceeded the performance of this peer group by 2ppts and its growth accelerated by 0ppts 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 neither favourable nor unfavourable.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 22.7% in the last 12 months, a decline from 27.2% in FY23. 

Historically, 002349.SZ has reported strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 14.6%, down from 16.4% in FY23. 

Jinghua Pharmaceutical Group Co., Ltd. reported a return on equity (RoE) of 8.0% in the last 12 months, down from 10.2% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 6.9%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to 6.2% in the last 12 months, a decrease from 8.0% in FY23. 

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.

002349.SZ has 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 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 robust profitability, strong debt servicing capacity, adequate interest coverage, 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, slow historical revenue growth, negligible return on capital, and poor working capital management.

In highly turbulent market conditions, 002349.SZ is volatile. In other words, the stock will fall much more 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 large. 

In normal market circumstances, 002349.SZ is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from moderate to substantial. 

Considering past and projected metrics, the stock is slightly 'cheaper' than its peers. Specifically, the stock is fairly valued on P/E, neutral on EV/EBITDA, reasonably priced on P/FCF. 

Jinghua Pharmaceutical Group Co., Ltd.

CN¥ 7.5

4

Jinghua Pharmaceutical Group Co., Ltd.

CN¥ 7.5

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 7.5

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