The average target price of 600486.SS is 75 and suggests 44% 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 82.0. This translates into 57% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 60.5. This suggests 16% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Jiangsu Yangnong Chemical Co., Ltd. produces and sells pesticides in China. It provides pyrethroids for use in health and agricultural applications. The company also exports its products. Jiangsu Yangnong Chemical Co., Ltd. was founded in 1999 and is based in Yangzhou, China.

China

Jiangsu Yangnong Chemical 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. 

600486.SS reported revenue of CNY 10 490mn in the last 12 months, up 1% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 0% from FY24 to CNY 2.99. Market expects EPS to reach CNY 3.19 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 4ppts over six months and grown 2ppts 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 neutral.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 15.7% in the last 12 months, a decline from 23.3% in FY23. 

Historically, 600486.SS has reported strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 11.5%, down from 13.7% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 11.2%, above the peers. The consensus estimate for FY24 for RoCE is 15.2%, again ahead of the peers. 

Jiangsu Yangnong Chemical Co., Ltd. reported a return on equity (RoE) of 11.7% in the last 12 months, down from 17.2% in FY23. The market consensus projects an RoE of 12.7% in FY24, again ahead of its peers. 

Another important profitability metric, return on assets (RoA), amounted to 7.1% in the last 12 months, a decrease from 10.2% in FY23. The market analysts predict that RoA will be 7.9% in FY24, again stronger than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 2.1 in the past several years. This ratio implies a strong 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.

600486.SS boasts high trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually very stable and remains 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 solid return on capital, 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 and we point to weak positions in its industry, slow historical revenue growth.

In highly turbulent market conditions, 600486.SS is not volatile. In other words, the stock will fall far less 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 very low. 

In normal market circumstances, 600486.SS is not overly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will remain relatively stable. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to minimal. We would also like to highlight the minimal intraday volatility of the instrument. 

Based on key historical and expected multiples, the stock is fairly valued relative to its peers. Specifically, the stock is fairly valued on P/E, neutral on EV/EBITDA, overpriced on P/FCF. 

Jiangsu Yangnong Chemical Co., Ltd.

CN¥ 52.02

6

Jiangsu Yangnong Chemical Co., Ltd.

CN¥ 52.02

6

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 52.02

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