Intrinsic Value Zhejiang Supor Co., Ltd. (002032.SZ)

• Previous Close: $43.17
• Intrinsic Value: $22.82
• Upside potential: -47%

Stock Valuation Context

Business Model And Market Position

Zhejiang Supor operates as a comprehensive manufacturer and distributor within the global consumer cyclical sector, specializing in cookware and household appliances. The company's diversified product portfolio spans three core categories: traditional cookware including pressure cookers and woks, small kitchen electric appliances like rice cookers and induction hobs, and larger kitchen systems comprising range hoods and gas stoves. This multi-tiered approach allows Supor to capture value across various price points and consumer segments, from basic kitchen essentials to premium integrated cooking solutions. The firm maintains a vertically integrated model that encompasses research, development, and manufacturing, enabling quality control and cost efficiency. Operating in a highly competitive market dominated by both international giants and local specialists, Supor has established itself as a leading domestic brand in China while expanding its international footprint. The company leverages its extensive distribution network and brand recognition to maintain market share, particularly in the Asian market where kitchenware consumption continues to grow alongside urbanization and rising disposable incomes. Supor's strategic focus on product innovation and household penetration positions it to benefit from consumer upgrades and replacement cycles in the home appliances sector.

Revenue Profitability And Efficiency

Supor demonstrated solid financial performance with revenue of CNY 22.4 billion and net income of CNY 2.24 billion for FY 2024, translating to a healthy net margin of approximately 10%. The company generated robust operating cash flow of CNY 2.58 billion, significantly exceeding its capital expenditures of CNY 208 million. This indicates efficient operations and strong cash conversion capabilities, with the business generating substantial free cash flow to support future investments and shareholder returns.

Earnings Power And Capital Efficiency

The company exhibits strong earnings power with diluted EPS of CNY 2.81, reflecting effective utilization of its equity base. Supor's capital allocation appears disciplined, with modest capital expenditures relative to operating cash flow, suggesting a capital-light business model that doesn't require heavy reinvestment to maintain operations. This efficient use of capital supports sustainable earnings generation and provides flexibility for strategic initiatives.

Balance Sheet And Financial Health

Supor maintains a conservative financial position with cash and equivalents of CNY 2.48 billion against total debt of CNY 1.52 billion, indicating a net cash position. This strong liquidity profile provides ample financial flexibility to navigate market cycles and pursue growth opportunities. The company's balance sheet structure appears well-managed with moderate leverage, supporting its investment-grade financial health and operational stability.

Growth Trends And Dividend Policy

The company has demonstrated a shareholder-friendly approach through its dividend policy, distributing CNY 2.81 per share which represents a 100% payout ratio based on FY 2024 earnings. This substantial distribution reflects management's confidence in the company's cash generation capabilities and commitment to returning capital to shareholders. The dividend policy aligns with the company's mature market position and stable cash flow characteristics.

Valuation And Market Expectations

With a market capitalization of approximately CNY 40.1 billion, Supor trades at a P/E ratio of around 18 based on FY 2024 earnings. The beta of 0.53 suggests lower volatility compared to the broader market, indicating investor perception of the company as a relatively defensive consumer staples investment. This valuation multiple reflects expectations for stable growth in the household appliances sector.

Strategic Advantages And Outlook

Supor's competitive advantages stem from its established brand reputation, comprehensive product portfolio, and integrated manufacturing capabilities. The company is well-positioned to benefit from ongoing urbanization trends and consumer upgrading in China's home appliance market. Strategic focus on product innovation and channel expansion should support sustained market leadership, though the company faces intensifying competition and potential economic cyclicality affecting consumer discretionary spending.

Sources

Company Annual ReportBloombergShenzhen Stock Exchange filings