Minfeng Special Paper Co., Ltd. manufactures and sells papers in China. It offers cigarette, tracing, glassine, vacuum aluminized base, and sublimation digital transfer papers for use in national defense, cigarette, agriculture, medical treatment, culture, printing, food, packaging, decoration, and other industries and fields. The company was founded in 1923 and is based in Jiaxing, China.

China

Minfeng Special Paper Co., Ltd.

Basic Materials

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 barely been above zero and was substantially below that of its peers. On average, the company pays dividends annually. 

600235.SS reported revenue of CNY 1 377mn in the last 12 months, down 5% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 38% from FY24 to CNY 0.13.

The stock's performance has been mixed in the past six months, with growth following a decline. The stock has outperformed its global peers from the same sector and industry (as shown above), surpassing them by 11ppts in total. At the same time, the stock's performance relative to its the peers from the same country and sector is different. The stock outperformed these peers by 2ppts over the past six months and grew 2ppts faster in the past month. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 7.3% in the last 12 months, a decline from 8.7% in FY23. 

Historically, 600235.SS has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 3.2%, a growth from 3.2% in FY23. 

Minfeng Special Paper Co., Ltd. reported a return on equity (RoE) of 3.0% in the last 12 months, down from 3.6% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 1.6% in the last 12 months, a decrease from 2.1% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 2.6%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.3 in the past several years. This ratio implies a weak 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.

600235.SS boasts high trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually quite 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. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, bleak profitability, negligible return on capital, and weak debt servicing capacity.

In highly turbulent market conditions, 600235.SS 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, 600235.SS 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 low to mild. 

From both historical and forecast perspectives, the stock is considerably overpriced compared to similar stocks. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITD. 

Minfeng Special Paper Co., Ltd.

CN¥ 5.93

4

Minfeng Special Paper Co., Ltd.

CN¥ 5.93

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 5.93

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