Intrinsic Value Jiangsu Allfavor Intelligent Circuits Technology CO.,Ltd (300964.SZ)

• Previous Close: $57.44
• Intrinsic Value: $38.86
• Upside potential: -32%

Stock Valuation Context

Business Model And Market Position

Jiangsu Allfavor Intelligent Circuits Technology operates as a specialized manufacturer of printed circuit boards (PCBs), serving diverse industrial sectors from its base in Nanjing, China. The company's core revenue model is built on the production and sale of a comprehensive portfolio of PCB solutions, including single/double-sided boards, multi-layer boards, thick copper plates, metal substrates, flexible and rigid-flex boards, and high-density interconnect (HDI) boards. This diversified product offering allows Allfavor to address varying technical requirements and price points across its target markets. The company strategically positions itself within the global electronics supply chain, catering to demanding applications in communications infrastructure, automotive electronics, power systems, medical devices, and military equipment. This sector diversification helps mitigate cyclical downturns in any single industry. Allfavor's market position is that of a specialized domestic Chinese supplier competing in a fragmented but highly competitive global PCB industry. The company leverages its technical capabilities in producing advanced board types to differentiate from lower-end commodity producers while facing intense competition from both larger domestic players and international PCB manufacturers. Its focus on intelligent circuit technology suggests an orientation toward higher-value, application-specific solutions rather than standardized mass production.

Revenue Profitability And Efficiency

For FY 2024, Allfavor reported revenue of approximately CNY 596 million with net income of CNY 23.7 million, resulting in a net profit margin of roughly 4%. The company generated positive operating cash flow of CNY 28.2 million, though this was substantially lower than net income, indicating potential working capital absorption. Capital expenditures of CNY 121.8 million significantly exceeded operating cash flow, reflecting aggressive investment in production capacity or technological upgrades.

Earnings Power And Capital Efficiency

The company delivered diluted EPS of CNY 0.31 for the fiscal year. The substantial capital expenditure program, which far exceeded operating cash generation, suggests Allfavor is in an investment-intensive phase. This strategic capital deployment aims to enhance manufacturing capabilities and product offerings, though it currently pressures near-term free cash flow generation and capital efficiency metrics.

Balance Sheet And Financial Health

Allfavor maintains a conservative debt profile with total debt of only CNY 15.3 million against cash and equivalents of CNY 215.8 million, resulting in a net cash position. This strong liquidity position provides financial flexibility to fund ongoing expansion and weather industry cyclicality. The robust balance sheet underscores the company's financial stability despite its significant investment activities.

Growth Trends And Dividend Policy

The company demonstrated a commitment to shareholder returns with a dividend per share of CNY 0.10, representing a payout ratio of approximately 32% based on FY 2024 earnings. This balanced approach combines returning capital to shareholders while retaining earnings to fund growth initiatives. The substantial capital expenditure program indicates management's focus on capacity expansion and technological advancement to drive future revenue growth.

Valuation And Market Expectations

With a market capitalization of approximately CNY 3.7 billion, the company trades at a significant premium to book value, reflecting market expectations for future growth in the PCB sector. The beta of 0.93 suggests stock volatility slightly below the broader market average, indicating moderate sensitivity to market movements while still being influenced by sector-specific dynamics and company performance.

Strategic Advantages And Outlook

Allfavor's strategic position hinges on its technical capabilities across diverse PCB technologies and its exposure to growth sectors like automotive electronics and communications infrastructure. The company's net cash position provides a buffer against industry cyclicality while supporting continued investment in advanced manufacturing capabilities. Key challenges include navigating intense price competition, raw material cost fluctuations, and evolving technological requirements in end markets. Success will depend on effectively leveraging its specialized product portfolio to capture demand from electronics OEMs requiring higher-value solutions.

Sources

Company Financial ReportsShenzhen Stock Exchange Filings