Shanghai Luoman Lighting Technologies Inc. provides urban landscape lighting solutions. The company offers overall lighting planning, landscape lighting design and construction, and centralized remote-control management services. Shanghai Luoman Lighting Technologies Inc. was founded in 1999 and is based in Shanghai, China.

China

Shanghai Luoman Lighting Technologies Inc.

Industrials

The company pays dividends irregularly. 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 been low and below its peers. 

605289.SS reported revenue of CNY 746mn in the last 12 months, up 9% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 13% from FY24 to CNY -0.35. Market expects EPS to reach CNY 1.28 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 17ppts over past six months and grown 10ppts faster in the past month. 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 -4.4% in the last 12 months, a decline from 19.8% in FY23. 

Historically, 605289.SS has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -5.2%, down from 13.2% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -2.6%, below the peers. The consensus estimate for FY24 for RoCE is 11.5%, again behind the peers. 

Shanghai Luoman Lighting Technologies Inc. reported a return on equity (RoE) of -3.0% in the last 12 months, down from 6.3% in FY23. The market consensus projects an RoE of 10.5% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to -1.8% in the last 12 months, a decrease from 4.1% in FY23. The market analysts predict that RoA will be 6.9% in FY24, more robust than its peers in this period. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.1 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.

605289.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, 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, poor working capital management, and weak debt servicing capacity.

In highly turbulent market conditions, 605289.SS is highly volatile. In other words, the stock will fall substantially 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 significant. 

In normal market circumstances, 605289.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 significant to immense. We would also like to highlight the immense intraday volatility of the instrument. 

Based on key historical and expected multiples, the stock is overvalued relative to its peers. In particular, the stock is reasonably priced on P/E, 'expensive' on EV/EBITD. 

Shanghai Luoman Lighting Technologies Inc.

CN¥ 28.45

2

Shanghai Luoman Lighting Technologies Inc.

CN¥ 28.45

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

CN¥ 28.45

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