YCQH Agricultural Technology Co. Ltd. engages in the wholesaling and retailing of bio-carbon-based fertilizer products in the People's Republic of China. The company was incorporated in 2019 and is based in Chengdu, the People's Republic of China.

China

YCQH Agricultural Technology Co. Ltd.

Basic Materials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

YCQH reported revenue of USD 1mn in the last 12 months, up 13% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 650% from FY23 to USD 0.00.

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 65ppts and its growth decelerated by 5ppts 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 favourable. This generally signifies that a stock is fairly valued or marginally undervalued abd is becoming more 'expensive', suggesting a short-term spike in confidence by the market at large.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -17.8% in the last 12 months, up from -57.8% in FY22. 

Historically, YCQH has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 24.9%, a growth from -62.9% in FY22. 

YCQH Agricultural Technology Co. Ltd. reported a return on equity (RoE) of -73.2% in the last 12 months, down from 33.4% in FY22. 

Another important profitability metric, return on assets (RoA), amounted to 40.3% in the last 12 months, an increase from -19.0% in FY22. 

In the last 12 months, the return on capital employed (RoCE) declined to -81.3%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 34.4 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.

YCQH has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is very unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny 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 bleak profitability, negligible return on capital, poor working capital management, inadequate interest coverage, and poor cash flow generation.

In highly turbulent market conditions, YCQH 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, YCQH is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from significant to immense. 

From both historical and forecast perspectives, the stock is considerably overpriced compared to similar stocks. In particular, the stock is overpriced on P/E, overvalued on P/FC. 

YCQH Agricultural Technology Co. Ltd.

$ 0.33

2

YCQH Agricultural Technology Co. Ltd.

$ 0.33

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 0.33

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