Shinelong Automotive Lightweight Application Limited, an investment holding company, designs, manufactures, and sells customized molds in the People's Republic of China and internationally. The company focuses on molds for the production of automotive parts, which cover automotive lightweight applications, as well as electrical and health protective appliance, and other parts. Its products and services include hot-pressing and hydroforming molds; automotive, bicolor, and TV injection molds; and parts processing services. The company also design, manufactures, and sells laser devices. Shinelong Automotive Lightweight Application Limited was founded in 2002 and is based in Kunshan, the People's Republic of China.

China

Shinelong Automotive Lightweight Application Limited

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

1930.HK reported revenue of CNY 238mn in the last 12 months, up 9% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 0% from FY23 to CNY 0.04.

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 49ppts and its growth decelerated by 2ppts 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 modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 9.8% in the last 12 months, a decline from 19.6% in FY22. 

Historically, 1930.HK has reported average net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 6.7%, down from 9.4% in FY22. 

Another important profitability metric, return on assets (RoA), amounted to 2.5% in the last 12 months, a decrease from 2.7% in FY23. 

Shinelong Automotive Lightweight Application Limited reported a return on equity (RoE) of 4.6% in the last 12 months, down from 4.8% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 4.4%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.2 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.

1930.HK has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny 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 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, slow historical revenue growth, negligible return on capital, and poor working capital management.

In highly turbulent market conditions, 1930.HK 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, 1930.HK 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 'cheaper' than its peers. Specifically, the stock is 'cheap' on P/E, neutral on EV/EBITD. 

Shinelong Automotive Lightweight Application Limited

HK$ 0.36

3

Shinelong Automotive Lightweight Application Limited

HK$ 0.36

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

HK$ 0.36

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