Hangzhou Greenda Electronic Materials Co., Ltd. engages in the research and development, production, and servicing of high-purity electronic chemicals worldwide. It offers electronic chemical products for TFT-LCD, IC, PV, and other industries. The company was founded in 2001 and is based in Hangzhou, China.

China

Hangzhou Greenda Electronic Materials Co., Ltd.

Basic Materials

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, and there is a clear trend. In the past 12 months, the dividend yield has been low and below its peers. On average, the company pays dividends annually. 

603931.SS reported revenue of CNY 646mn in the last 12 months, down 1% from FY24. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 1% from FY24 to CNY 0.73.

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 11ppts and its growth decelerated by 8ppts 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 good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 27.8% in the last 12 months, a decline from 32.0% in FY23. 

Historically, 603931.SS has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 22.3%, down from 25.2% in FY23. 

Hangzhou Greenda Electronic Materials Co., Ltd. reported a return on equity (RoE) of 9.1% in the last 12 months, down from 12.1% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 8.9%, above the peers. 

Another important profitability metric, return on assets (RoA), amounted to 8.3% in the last 12 months, a decrease from 10.7% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.5 in the past several years. This ratio implies a excellent 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.

603931.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 robust profitability, 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 excessive margin volatility.

In highly turbulent market conditions, 603931.SS is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, 603931.SS is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from large 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. 

Hangzhou Greenda Electronic Materials Co., Ltd.

CN¥ 27.05

3

Hangzhou Greenda Electronic Materials Co., Ltd.

CN¥ 27.05

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 27.05

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