Aurisco Pharmaceutical Co.,Ltd. engages in research, manufacturing, and marketing of intermediates, specialty active pharmaceutical ingredients (API's), and formulations catering to the pharmaceutical market worldwide. The company offers steroids, oncology, antiretroviral, and other APIs and intermediates. It also provides contract manufacturing services and related development works for chemicals, intermediates, and API's. Aurisco Pharmaceutical Co.,Ltd. was founded in 1998 and is headquartered in Tiantai, China.

China

Aurisco Pharmaceutical Co.,Ltd.

Healthcare

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 an evident trend. In the past 12 months, the dividend yield has been low and below its peers. On average, the company pays dividends annually. 

605116.SS reported revenue of CNY 1 539mn in the last 12 months, up 5% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 11% from FY24 to CNY 0.98. Market expects EPS to reach CNY 0.96 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 6ppts and its growth decelerated by 3ppts 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 32.2% in the last 12 months, a decline from 32.7% in FY23. 

Historically, 605116.SS has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 25.5%, a growth from 22.9% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 14.2%, below the peers. The consensus estimate for FY24 for RoCE is 19.2%, however, this time ahead of the peers. 

Aurisco Pharmaceutical Co.,Ltd. reported a return on equity (RoE) of 17.8% in the last 12 months, up from 15.9% in FY23. The market consensus projects an RoE of 17.8% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to 12.1% in the last 12 months, a decrease from 12.6% in FY23. The market analysts predict that RoA will be 13.2% in FY24, again stronger than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 3.2 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.

605116.SS boasts high trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually very stable and remains favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is moderate. We note robust profitability, solid return on capital, 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, excessive margin volatility, and poor working capital management.

In highly turbulent market conditions, 605116.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, 605116.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. 

Based on key historical and expected multiples, the stock is fairly valued relative to its peers. Specifically, the stock is fairly valued on P/E, neutral on EV/EBITD. 

Aurisco Pharmaceutical Co.,Ltd.

CN¥ 21.61

5

Aurisco Pharmaceutical Co.,Ltd.

CN¥ 21.61

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 21.61

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