Hunan Haili Chemical Industry Co., Ltd. develops, produces, and trades in pesticides and fine chemicals in China. It offers insecticides, fungicides, phosgenation products, pesticide intermediates, special chemicals, and seed coating agents under the Haili brand. The company was founded in 1994 and is based in Changsha, China.

China

Hunan Haili Chemical Industry Co., Ltd.

Basic Materials

The company pays dividends on rare occasions. There have only been a few years with dividend payments in 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. 

600731.SS reported revenue of CNY 2 555mn in the last 12 months, up 4% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 17% from FY24 to CNY 0.56. Market expects EPS to reach CNY 0.00 in FY25.

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 12ppts and its growth decelerated by 7ppts 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 16.5% in the last 12 months, up from 12.8% in FY23. 

Historically, 600731.SS has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 12.2%, a growth from 11.5% in FY23. 

Hunan Haili Chemical Industry Co., Ltd. reported a return on equity (RoE) of 10.0% in the last 12 months, down from 10.8% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 8.2%, above the peers. 

Another important profitability metric, return on assets (RoA), amounted to 7.0% in the last 12 months, an increase from 6.6% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 2.0 in the past several years. This ratio implies a good 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.

600731.SS has above average 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. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. 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 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, and poor working capital management.

In highly turbulent market conditions, 600731.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, 600731.SS is as volatile as an index. Put differently, without outstanding market volatility or shocking company news, the stock's price will move with the index. The stock's losses on its worst days (less than 1-5% of the time) will range from limited to mild. 

Considering past and projected metrics, the stock is 'cheaper' than its peers. In particular, the stock is underpriced on P/E, 'cheap' on EV/EBITD. 

Hunan Haili Chemical Industry Co., Ltd.

CN¥ 6.44

5

Hunan Haili Chemical Industry Co., Ltd.

CN¥ 6.44

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 6.44

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