Intrinsic Value Roshow Technology Co., Ltd. (002617.SZ)

• Previous Close: $8.60
• Intrinsic Value: $3.27
• Upside potential: -62%

Stock Valuation Context

Business Model And Market Position

Roshow Technology operates as a specialized manufacturer of electromagnetic products, primarily serving industrial and renewable energy markets. The company's core business involves the research, development, and production of various enameled wires, including composite, variable frequency, and ultra-fine enameled copper wires, which are essential components in electrical applications. These products cater to diverse sectors such as home appliances, electric power, telecommunications, automotive, and aerospace industries, positioning the company within the electrical equipment supply chain. Beyond its traditional wire manufacturing, Roshow has strategically expanded into photovoltaic power generation, engaging in the investment, design, construction, and operation of solar power plants. This dual-focused approach leverages its industrial expertise while capitalizing on China's renewable energy transition. Founded in 1984 and based in Zhuji, the company has established both domestic presence and international reach, exporting products to markets including the United States, Japan, and Europe. Its market position reflects a hybrid model combining manufacturing specialization with energy infrastructure development.

Revenue Profitability And Efficiency

For the fiscal year, Roshow Technology reported revenue of CNY 3.72 billion, achieving net income of CNY 258 million with a diluted EPS of CNY 0.14. The company's profitability metrics indicate operational execution within its competitive industrial segment. However, operating cash flow was negative at CNY -420.6 million, which, combined with capital expenditures of CNY -228.4 million, suggests significant cash outflows for investments or working capital requirements during the period.

Earnings Power And Capital Efficiency

The company demonstrated earnings power through its net income generation despite challenging cash flow dynamics. The negative operating cash flow position requires careful analysis of working capital management and investment timing. Capital allocation appears directed toward both maintaining manufacturing capabilities and supporting its photovoltaic power plant initiatives, reflecting the capital-intensive nature of its diversified business model.

Balance Sheet And Financial Health

Roshow Technology maintained a cash position of CNY 834 million against total debt of CNY 1.76 billion, indicating leveraged operations. The balance sheet structure supports both working capital needs and strategic investments in its dual business lines. The company's financial health reflects typical characteristics of industrial manufacturers with expansionary activities in renewable energy infrastructure.

Growth Trends And Dividend Policy

The company maintained a conservative dividend policy with no dividend distribution for the period, retaining earnings to fund operational and strategic initiatives. Growth appears focused on expanding its photovoltaic operations while maintaining its core wire manufacturing business. The international export footprint to multiple countries provides additional growth channels beyond domestic Chinese markets.

Valuation And Market Expectations

With a market capitalization of approximately CNY 18.4 billion, the company's valuation reflects investor expectations for its hybrid business model. The beta of 0.54 suggests lower volatility compared to the broader market, potentially indicating perceived stability in its industrial and renewable energy operations. Market pricing appears to incorporate both traditional manufacturing and energy transition themes.

Strategic Advantages And Outlook

Roshow's strategic advantages include its long-established manufacturing expertise dating to 1984 and its strategic diversification into photovoltaic energy. The outlook depends on execution in both core wire products and solar power development, with international exports providing additional revenue diversification. Success will hinge on effectively managing the capital requirements of both business segments while navigating industrial and renewable energy market dynamics.

Sources

Company Financial ReportsShenzhen Stock Exchange