The average target price of 002674.SZ is 13 and suggests 32% 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 13.0. This translates into 32% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 13.0. This suggests 32% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Xingye Leather Technology Co., Ltd., together with its subsidiaries, provides leather materials in China. The company offers nappa leather, natural wrinkle leather, and special effect leather series that are used in the furniture industry, leather apparel industry and goods luggage industry, and other fields. It sells shoe upper and bag leather, and sofa leather. The company also exports its products. Xingye Leather Technology Co., Ltd. was founded in 1992 and is headquartered in Jinjiang, China.

China

Xingye Leather Technology Co., Ltd.

Consumer Cyclical

The company tries to pay dividends regularly but only sometimes does so. It has paid dividends in roughly half 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 barely been above zero and was substantially below that of its peers. On average, the company pays dividends annually. 

002674.SZ reported revenue of CNY 2 978mn in the last 12 months, up 1% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 11% from FY24 to CNY 0.43.

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 9ppts over past six months and grown 5ppts 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 modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 9.2% in the last 12 months, a decline from 13.7% in FY23. 

Historically, 002674.SZ has reported average net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 4.2%, down from 6.9% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 4.2%, below the peers. 

Xingye Leather Technology Co., Ltd. reported a return on equity (RoE) of 5.2% in the last 12 months, down from 7.8% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 2.9% in the last 12 months, a decrease from 4.7% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.1 in the past several years. This ratio implies a average 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.

002674.SZ has average 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. 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 adequate interest coverage 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, and poor working capital management.

In highly turbulent market conditions, 002674.SZ is moderately volatile. In other words, the stock will fall 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 moderate. 

In normal market circumstances, 002674.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 limited to average. 

From both historical and forecast perspectives, the stock is fairly priced compared to similar stocks. Specifically, the stock is fairly valued on P/E, neutral on EV/EBITDA, reasonably priced on P/FCF. 

Xingye Leather Technology Co., Ltd.

CN¥ 9.78

4

Xingye Leather Technology Co., Ltd.

CN¥ 9.78

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 9.78

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