Intrinsic Value CoCreation Grass Co., Ltd (605099.SS)

• Previous Close: $42.98
• Intrinsic Value: $11.42
• Upside potential: -73%

Stock Valuation Context

Business Model And Market Position

CoCreation Grass Co., Ltd. is a specialized manufacturer and global distributor of artificial turf, operating within the specialty chemicals segment of the Basic Materials sector. The company's core revenue model is based on the production and sale of high-performance synthetic grass products designed for two primary end-markets: athletic fields and residential or commercial landscaping. Its product portfolio caters to a diverse client base that includes professional sports organizations, governmental infrastructure projects, educational institutions, and individual households, creating a diversified revenue stream. Headquartered in Nanjing, China, the company leverages its manufacturing expertise and global distribution network to serve an international customer base, positioning itself as a key player in the growing artificial turf industry. This market is driven by increasing demand for low-maintenance, durable, and environmentally conscious landscaping solutions, as well as the global expansion of sports infrastructure. CoCreation Grass competes on the basis of product quality, technological innovation in synthetic fiber development, and its ability to meet the specific performance requirements of professional athletic applications, which allows it to maintain a defensible market position.

Revenue Profitability And Efficiency

For the fiscal year, the company reported robust revenue of approximately CNY 2.95 billion. It demonstrated strong profitability with a net income of CNY 511 million, translating to a healthy net margin. Operating cash flow generation was solid at CNY 465 million, significantly exceeding capital expenditures, indicating efficient conversion of earnings into cash.

Earnings Power And Capital Efficiency

The company exhibits considerable earnings power, as evidenced by its diluted EPS of CNY 1.28. Capital expenditure of CNY 170 million was more than covered by its strong operating cash flow, suggesting disciplined investment and efficient use of capital to maintain and grow its production capabilities.

Balance Sheet And Financial Health

The balance sheet reflects a strong financial position with a substantial cash reserve of CNY 943 million. Total debt is a manageable CNY 153 million, resulting in a very conservative leverage profile. This provides significant liquidity and financial flexibility to navigate market cycles and pursue strategic opportunities.

Growth Trends And Dividend Policy

The company has established a shareholder-friendly dividend policy, distributing CNY 0.64 per share. This payout represents a 50% distribution ratio from its earnings, signaling a commitment to returning capital to shareholders while retaining a portion for reinvestment and future growth initiatives.

Valuation And Market Expectations

With a market capitalization of approximately CNY 13.96 billion, the market assigns a significant premium to the company's current earnings. A beta of 1.076 indicates that the stock's volatility is slightly above the broader market average, reflecting a growth-oriented valuation that incorporates expectations for future expansion.

Strategic Advantages And Outlook

The company's strategic advantages lie in its specialized manufacturing focus and global market reach within the niche artificial grass industry. Its strong balance sheet and cash generation provide a solid foundation to capitalize on growing demand for synthetic turf in both athletic and landscaping applications worldwide, supporting a positive operational outlook.

Sources

Company Annual ReportShanghai Stock Exchange Filings