Intrinsic Value Xiamen Sunrise Group Co., Ltd. (002593.SZ)

• Previous Close: $5.91
• Intrinsic Value: $2.59
• Upside potential: -56%

Stock Valuation Context

Business Model And Market Position

Xiamen Sunrise Group operates as a specialized manufacturer and global distributor of steel and aluminum wheels within the automotive parts sector. The company's core revenue model is built on the research, development, fabrication, and direct distribution of a comprehensive portfolio of wheel products. Its offerings cater primarily to commercial vehicles, including section steel light truck rings, tubeless rims for trucks and buses, and forged aluminum rings for both trucks and passenger cars. This positions the firm squarely in the automotive component manufacturing industry, serving original equipment manufacturers and aftermarket channels. Xiamen Sunrise has established a significant international footprint, exporting its products to approximately 100 countries across Europe, the Americas, Southeast Asia, Australia, the Middle East, and Africa. This extensive global distribution network underscores its competitive positioning as an export-oriented supplier. The company's focus on both steel and aluminum wheel technologies allows it to address diverse market segments and vehicle requirements. Founded in 1995 and based in Xiamen, China, the group leverages its long-standing operational history and manufacturing scale to compete on cost efficiency and product reliability in the highly competitive auto parts market.

Revenue Profitability And Efficiency

For the fiscal year, the company reported revenue of CNY 3.07 billion, achieving a net income of CNY 52.0 million. This translates to a net profit margin of approximately 1.7%, indicating relatively thin profitability on its sales base. The diluted earnings per share stood at CNY 0.065. Operating cash flow generation was robust at CNY 410.7 million, significantly exceeding net income and suggesting healthy cash conversion from its core operations.

Earnings Power And Capital Efficiency

The company demonstrated solid underlying cash generation, with operating cash flow of CNY 410.7 million comfortably covering capital expenditures of CNY 194.1 million. This resulted in positive free cash flow, highlighting the business's ability to self-fund its investments. The capital expenditure intensity relative to revenue appears moderate, reflecting a mature manufacturing operation with disciplined investment in maintaining and upgrading production capacity.

Balance Sheet And Financial Health

The balance sheet shows a cash and equivalents position of CNY 757.6 million against total debt of CNY 863.0 million. This indicates a moderate level of leverage, with cash covering a significant portion of outstanding debt obligations. The overall financial structure suggests a stable, conservatively managed financial position typical for an industrial manufacturer, with sufficient liquidity to meet its operational and financial commitments.

Growth Trends And Dividend Policy

The company has implemented a shareholder returns policy, evidenced by a dividend per share of CNY 0.05 for the period. This payout represents a substantial portion of the diluted EPS, indicating a commitment to returning capital to shareholders. The growth trajectory will be influenced by global demand for vehicle wheels and the company's ability to maintain its competitive export market position.

Valuation And Market Expectations

With a market capitalization of approximately CNY 4.28 billion, the market valuation implies certain growth and margin expectations. The stock's beta of 0.36 suggests lower volatility compared to the broader market, which may reflect its established business model and niche market positioning. The valuation multiples will be assessed relative to its profitability metrics and industry peers.

Strategic Advantages And Outlook

The company's strategic advantages include its long operating history, established global export network, and diversified product portfolio for commercial and passenger vehicles. The outlook is tied to global automotive production cycles, raw material cost trends, and competitive dynamics in the wheel manufacturing industry. Its future performance will depend on effectively managing costs and leveraging its international market presence to capitalize on demand shifts.

Sources

Company Annual ReportShenzhen Stock Exchange Filings