Chengdu Tianjian Technology Co., Ltd. researches in, develops, manufactures, and sells solid-state microwave front-end products. It offers solid-state transmitters for use in the defense military applications; phased array antennas for use in commercial satellites; radar systems, and other microwave components, such as microwave altimeter transmitter for sea surface height measurement and ocean observation through three-dimensional imaging. The company was founded in 2005 and is based in Chengdu, China.

China

Chengdu Tianjian Technology Co., Ltd.

Industrials

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 somewhat mixed. 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. 

002977.SZ reported revenue of CNY 161mn in the last 12 months, up 18% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 63% from FY24 to CNY 0.21.

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 5ppts and its growth accelerated by 44ppts 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 favourable. This generally signifies that a stock is fairly valued or marginally undervalued abd is becoming more 'expensive', suggesting a short-term spike in confidence by the market at large.

The company has reported strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 38.9% in the last 12 months, up from 29.9% in FY23. 

Historically, 002977.SZ has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 16.0%, down from 29.9% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 2.3%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to 1.9% in the last 12 months, a decrease from 3.6% in FY23. 

Chengdu Tianjian Technology Co., Ltd. reported a return on equity (RoE) of 2.3% in the last 12 months, down from 4.6% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.8 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.

002977.SZ has above 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. The trading volume mostly stays the same even under highly turbulent market conditions. 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, 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, slow historical revenue growth, negligible return on capital, and excessive margin volatility.

In highly turbulent market conditions, 002977.SZ is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, 002977.SZ is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Considering past and projected metrics, the stock is distinctly 'expensive' compared to its peers. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITDA, overpriced on P/FCF. 

Chengdu Tianjian Technology Co., Ltd.

CN¥ 38.75

2

Chengdu Tianjian Technology Co., Ltd.

CN¥ 38.75

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 38.75

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