Intrinsic Value Yotrio Group Co., Ltd. (002489.SZ)

• Previous Close: $3.79
• Intrinsic Value: $1.71
• Upside potential: -55%

Stock Valuation Context

Business Model And Market Position

Yotrio Group Co., Ltd. operates as a specialized manufacturer and global distributor of premium outdoor furniture, serving both residential and commercial markets. The company's core revenue model is built on the design, manufacturing, and sale of a diverse product portfolio that includes aluminum and steel furniture, meshes, wickers, resin wood, and various table top materials. Yotrio has established a multi-brand strategy to target different market segments, with brands such as Das Original and Royal Garden catering to the premium segment, while SunVilla and Outdoor Essentials address broader consumer markets. Operating within the competitive Consumer Cyclical sector, the company has developed significant vertical integration capabilities from research and development through to global distribution. Yotrio's market position is strengthened by its 30-year heritage since its 1992 founding, providing established manufacturing expertise and supply chain relationships. The company's international footprint allows it to capitalize on global demand for outdoor living products while maintaining its manufacturing base in Linhai, China. This positioning enables Yotrio to compete effectively against both domestic manufacturers and international brands in the outdoor furnishings space.

Revenue Profitability And Efficiency

Yotrio generated revenue of CNY 5.68 billion for the period, demonstrating substantial scale in the outdoor furniture market. The company achieved net income of CNY 462 million, reflecting a net margin of approximately 8.1%, indicating reasonable profitability in a competitive manufacturing sector. Operating cash flow of CNY 242.9 million, while positive, suggests some working capital intensity in the business model. Capital expenditures of CNY 146.3 million indicate ongoing investment in manufacturing capabilities and operational infrastructure.

Earnings Power And Capital Efficiency

The company reported diluted earnings per share of CNY 0.21, translating the net income into shareholder returns. The relationship between operating cash flow and capital expenditures shows the company is generating sufficient cash to fund its investment needs while maintaining operational liquidity. The earnings power appears stable, though the cash conversion cycle and working capital management would benefit from further analysis to assess capital efficiency metrics more comprehensively.

Balance Sheet And Financial Health

Yotrio maintains a balanced financial position with cash and equivalents of CNY 770.3 million against total debt of CNY 1.13 billion. This debt level appears manageable given the company's market capitalization and earnings capacity. The liquidity position provides operational flexibility, while the debt structure suggests a conservative approach to leverage. The balance sheet strength supports ongoing operations and potential strategic investments in manufacturing capacity or market expansion.

Growth Trends And Dividend Policy

The company has demonstrated a commitment to shareholder returns through a dividend per share of CNY 0.04, representing a payout from current earnings. The dividend policy appears sustainable given the profitability levels and cash generation. Growth trends would benefit from historical comparison, but the current scale suggests an established position in the outdoor furniture market with potential for international expansion and product category development.

Valuation And Market Expectations

With a market capitalization of approximately CNY 8.50 billion, the company trades at a price-to-earnings ratio of around 18.4 times based on current earnings. The beta of 0.244 indicates lower volatility compared to the broader market, suggesting investors view the company as relatively defensive within the Consumer Cyclical sector. This valuation reflects market expectations for stable performance in the outdoor furniture segment.

Strategic Advantages And Outlook

Yotrio's strategic advantages include its long-established manufacturing expertise, multi-brand portfolio addressing different market segments, and global distribution capabilities. The company's vertical integration from R&D to sales provides cost control and quality assurance benefits. The outlook depends on global demand for outdoor living products, with potential growth drivers including international expansion and product innovation. The company's established position and brand portfolio provide a foundation for navigating competitive market dynamics.

Sources

Company financial statementsShenzhen Stock Exchange disclosures