Holsin Engineering Consulting Group Co.,Ltd. operates as a engineering consulting company in China. The company specializes in engineering supervision, design consulting, testing and inspection, maintenance and reinforcement, project management, research and development, and other technical services, as well as application of new engineering materials. Holsin Engineering Consulting Group Co.,Ltd. was founded in 1995 and is based in Xiamen, China.

China

Holsin Engineering Consulting Group Co.,Ltd.

Industrials

The company pays dividends from time to time. It has paid dividends in less than 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. 

603909.SS reported revenue of CNY 6 515mn in the last 12 months, down 1% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 2% from FY24 to CNY 0.35. Market expects EPS to reach CNY 0.33 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). Within the past six months, its performance has trailed this peer group's by 1ppts and its growth decelerated by 2ppts 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 weak EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 2.4% in the last 12 months, a decline from 3.3% in FY23. 

Historically, 603909.SS has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 1.4%, down from 1.7% in FY23. 

Holsin Engineering Consulting Group Co.,Ltd. reported a return on equity (RoE) of 8.9% in the last 12 months, up from 6.8% in FY23. The market consensus projects an RoE of 6.7% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to 2.5% in the last 12 months, a decrease from 2.7% in FY23. The market analysts predict that RoA will be 2.2% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 7.8%, below the peers. The consensus estimate for FY24 for RoCE is 8.9%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.4 in the past several years. This ratio implies a average 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.

603909.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. 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 resilient historical revenue growth, low margin volatility, 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, bleak profitability, negligible return on capital, and poor working capital management.

In highly turbulent market conditions, 603909.SS is volatile. In other words, the stock will fall much more 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 large. 

In normal market circumstances, 603909.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 average. 

From both historical and forecast perspectives, the stock is underpriced compared to similar stocks. In particular, the stock is reasonably priced on P/E, 'cheap' on EV/EBITDA, undervalued on P/FCF. 

Holsin Engineering Consulting Group Co.,Ltd.

CN¥ 9.23

5

Holsin Engineering Consulting Group Co.,Ltd.

CN¥ 9.23

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 9.23

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