The average target price of 002674.SZ is 13 and suggests 35% 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 35% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 13.0. This suggests 35% 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 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 outstanding and can be rated excellent compared to its peers. At the same time, the average five-year yield has been significantly higher and exceeded most 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. Market expects EPS to reach CNY 0.56 in FY25.

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). Within the past six months, its performance has trailed this peer group's by 2ppts and its growth decelerated by 1ppts in the past month. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months its performance trailed that of this peer group by 12ppts and its growth decelerated by 3ppts in the previous month. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

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. 

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. The market consensus projects an RoE of 5.7% in FY24, again behind its peers. 

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 market analysts predict that RoA will be 3.2% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to 4.2%, below the peers. The consensus estimate for FY24 for RoCE is 7.1%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.0 in the past several years. This ratio implies a poor 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 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 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, 002674.SZ is moderately volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move slightly wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from moderate to average. 

Based on key historical and expected multiples, the stock is fairly valued relative to its peers. In particular, the stock is reasonably priced on P/E, of fair value on EV/EBITDA, trading at neutral levels on P/FCF. 

Xingye Leather Technology Co., Ltd.

CN¥ 9.46

5

Xingye Leather Technology Co., Ltd.

CN¥ 9.46

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 9.46

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