Leshan Electric Power Co.,Ltd, together with its subsidiaries, operates as a power company in China. It also operates in the natural gas, tap water, sewage treatment, hotel services, photovoltaic new energy, and other fields. The company was founded in 1988 and is based in Leshan, China.

China

Leshan Electric Power Co.,Ltd

Utilities

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

600644.SS reported revenue of CNY 3 203mn in the last 12 months, up 0% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 19% from FY24 to CNY 0.05. Market expects EPS to reach CNY 0.00 in FY25.

The stock has been growing steadily in the past six months, adding 109% in total. The stock has outperformed its global peers from the same sector and industry (as shown above), surpassing them by 106ppts in total. 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 'fair'.

The company has reported weak EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 3.6% in the last 12 months, a decline from 7.6% in FY23. 

Historically, 600644.SS has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 0.8%, a growth from 0.8% in FY23. 

Leshan Electric Power Co.,Ltd reported a return on equity (RoE) of 1.4% in the last 12 months, up from 1.3% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 0.8%, below the peers. 

Another important profitability metric, return on assets (RoA), amounted to 0.6% in the last 12 months, an increase from 0.6% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.4 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.

600644.SS boasts high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is relatively stable and remains favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. 

No other major risks have been identified.

The risk of default is moderate. We note low margin volatility, 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, bleak profitability, negligible return on capital, and poor working capital management.

In highly turbulent market conditions, 600644.SS is not overly volatile. In other words, the stock will fall 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 low. 

In normal market circumstances, 600644.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 moderate to notable. We would also like to highlight the notable 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 overpriced on P/E, 'expensive' on EV/EBITDA, overvalued on P/FCF. 

Leshan Electric Power Co.,Ltd

CN¥ 15.32

3

Leshan Electric Power Co.,Ltd

CN¥ 15.32

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 15.32

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