Shanghai Xujiahui Commercial Co., Ltd. operates retail department stores and supermarkets in China. It also operates commercial buildings. The company is based in Shanghai, China.

China

Shanghai Xujiahui Commercial Co., Ltd.

Consumer Cyclical

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, and there is a clear trend. In the past 12 months, the dividend yield has been low and below its peers. The company distributes nearly all its profit as dividends (payout ratio above 90%, a negative factor). It will not be easy to sustain such an extreme payout ratio. It may also indicate a company's lack of profitable growth opportunities, which suggests doubtful prospects. On average, the company pays dividends annually. 

002561.SZ reported revenue of CNY 401mn in the last 12 months, down 7% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. 

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). It has underperformed this peer group by 12ppts over six months and grown 8ppts 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 neutral.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 6.7% in the last 12 months, a decline from 39.0% in FY23. 

Historically, 002561.SZ has reported average net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -0.1%, down from 13.9% in FY23. 

Shanghai Xujiahui Commercial Co., Ltd. reported a return on equity (RoE) of 0.0% in the last 12 months, down from 3.4% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 0.0%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to 0.0% in the last 12 months, a decrease from 2.7% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.3 in the past several years. This ratio implies a weak 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.

002561.SZ has above average trading liquidity. The average private investor can sell his common position in the stock 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, 002561.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, 002561.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 notable. We would also like to highlight the notable intraday volatility of the instrument. 

Based on key historical and expected multiples, the stock is slightly overvalued relative to its peers. Specifically, the stock is overvalued on EV/EBITDA, reasonably priced on P/FC. 

Shanghai Xujiahui Commercial Co., Ltd.

CN¥ 8.33

4

Shanghai Xujiahui Commercial Co., Ltd.

CN¥ 8.33

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 8.33

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