The average target price of 002984.SZ is 25 and suggests 33% 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 29.5. This translates into 55% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 24.0. This suggests 26% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Qingdao Sentury Tire Co., Ltd. develops, produces, and sells tires in China. It offers car, 4x4 and SUV, business light truck, winter, run-flat, field racing, and cross country tires, as well as aviation tires under the SENTURY, LANDSAIL, DELINTE, and GROUNDSPEED brands. The company is headquartered in Qingdao, China.

China

Qingdao Sentury Tire 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 somewhat mixed. In the past 12 months, the dividend yield has been low and below its peers. On average, the company pays dividends annually. 

002984.SZ reported revenue of CNY 8 441mn 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 fell 6% from FY24 to CNY 2.02. Market expects EPS to reach CNY 2.39 in FY25.

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 25ppts over six months and grown 13ppts 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 slightly negative.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 29.2% in the last 12 months, up from 26.1% in FY23. 

Historically, 002984.SZ has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 24.2%, a growth from 17.5% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 12.2% in the last 12 months, an increase from 10.2% in FY23. The market analysts predict that RoA will be 15.8% in FY24, again stronger than its peers. 

Qingdao Sentury Tire Co., Ltd. reported a return on equity (RoE) of 15.9% in the last 12 months, up from 14.1% in FY23. The market consensus projects an RoE of 21.0% in FY24, again ahead of its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 13.7%, above the peers. The consensus estimate for FY24 for RoCE is 20.3%, again ahead of the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.7 in the past several years. This ratio implies a good 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.

002984.SZ boasts high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually very 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. 

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, excessive margin volatility, and poor working capital management.

In highly turbulent market conditions, 002984.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, 002984.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 significant to immense. 

From both historical and forecast perspectives, the stock is moderately underpriced compared to similar stocks. Specifically, the stock is 'cheap' on P/E, undervalued on EV/EBITDA, overpriced on P/FCF. 

Qingdao Sentury Tire Co., Ltd.

CN¥ 18.97

3

Qingdao Sentury Tire Co., Ltd.

CN¥ 18.97

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 18.97

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