Deluxe Family Co., Ltd. engages in the development and distribution of real estate properties. It develops and operates residential communities. The company is also involved in the construction of green facilities and decoration engineering; and commercial investment, as well as the provision of investment consulting services. In addition, it engages in the financial, environmental protection, and other equity investment operations. The company was founded in 1994 and is headquartered in Shanghai, China.

China

Deluxe Family Co., Ltd.

Real Estate

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 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. 

600503.SS reported revenue of CNY 318mn in the last 12 months, down 10% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 38% from FY24 to CNY -0.03.

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 13ppts and its growth accelerated by 11ppts 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 neither favourable nor unfavourable.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -14.8% in the last 12 months, a decline from 33.2% in FY23. 

Historically, 600503.SS has reported average net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -15.1%, down from 17.0% in FY23. 

Deluxe Family Co., Ltd. reported a return on equity (RoE) of -1.3% in the last 12 months, down from 1.6% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -1.1% in the last 12 months, a decrease from 1.3% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -1.3%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.1 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.

600503.SS has above average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is relatively 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 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 cash flow generation.

In highly turbulent market conditions, 600503.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, 600503.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 limited to mild. We would also like to highlight the mild intraday volatility of the instrument. 

From both historical and forecast perspectives, the stock is considerably overpriced compared to similar stocks. In particular, the stock is overvalued on P/FCF. 

Deluxe Family Co., Ltd.

CN¥ 2.71

3

Deluxe Family Co., Ltd.

CN¥ 2.71

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 2.71

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