Heilongjiang Publishing & Media Co., Ltd. engages in publishing, printing, and distributing books, newspapers, and periodicals in China. It also operates a chain of 100 bookstore outlets. The company was founded in 2014 and is based in Harbin, China.

China

Heilongjiang Publishing & Media Co., Ltd.

Communication Services

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. 

605577.SS reported revenue of CNY 1 519mn in the last 12 months, down 9% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 16% from FY24 to CNY 0.38.

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 3ppts 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 average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 13.8% in the last 12 months, a decline from 18.8% in FY23. 

Historically, 605577.SS has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 11.4%, down from 18.7% in FY23. 

Heilongjiang Publishing & Media Co., Ltd. reported a return on equity (RoE) of 4.6% in the last 12 months, down from 9.7% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 3.1% in the last 12 months, a decrease from 6.6% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 3.6%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.0 in the past several years. This ratio implies a poor 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.

605577.SS has above average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually 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 robust profitability, adequate interest coverage, 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, 605577.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, 605577.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 immense. We would also like to highlight the immense intraday volatility of the instrument. 

From both historical and forecast perspectives, the stock is considerably overpriced compared to similar stocks. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITDA, overpriced on P/FCF. 

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Heilongjiang Publishing & Media Co., Ltd.

CN¥ 12.71

3

Heilongjiang Publishing & Media Co., Ltd.

CN¥ 12.71

3

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Risk factor

Profitability factor

CN¥ 12.71

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