Shenzhen Jianyi Decoration Group Co., Ltd. offers interior architectural decoration construction and design services. It provides services for office, cultural, educational, sports and health, transportation infrastructure, and other public and residential buildings, as well as government agencies and star-rated hotels. The company was founded in 1994 and is based in Shenzhen, China.

China

Shenzhen Jianyi Decoration Group Co., Ltd.

Industrials

The company pays dividends irregularly. There have only been a few years with dividend payments in 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. 

002789.SZ reported revenue of CNY 6 163mn in the last 12 months, down 1% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 5% from FY24 to CNY -5.43.

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). It has underperformed this peer group by 22ppts over six months and grown 17ppts 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 very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -9.5% in the last 12 months, a decline from -6.0% in FY23. 

Historically, 002789.SZ has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -14.1%, down from -8.9% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -77.4%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to -8.6% in the last 12 months, a decrease from -5.8% in FY23. 

Shenzhen Jianyi Decoration Group Co., Ltd. reported a return on equity (RoE) of 215.4% in the last 12 months, up from -547.5% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -3.5 in the past several years. This ratio implies a fragile 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.

002789.SZ has below 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 very 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 resilient historical revenue growth and low margin volatility, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, negligible return on capital, poor working capital management, inadequate interest coverage, poor cash flow generation, and an unfavourable capital structure.

In highly turbulent market conditions, 002789.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, 002789.SZ is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from large to substantial. 

From both historical and forecast perspectives, the stock is considerably underpriced compared to similar stocks. In particular, the stock is undervalued on P/FCF. 

Shenzhen Jianyi Decoration Group Co., Ltd.

CN¥ 8.48

4

Shenzhen Jianyi Decoration Group Co., Ltd.

CN¥ 8.48

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 8.48

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