IRICO Group New Energy (SEHK:438) - Share price, News & Analysis

Q: What is the Fair Price of 438 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

438 (HK$9.11) is trading below our estimate of [[fair value]] (HK$21.16)

438 fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	6/6
Past Performance	1/6
Financial Health	3/6
Dividends	0/6

438 Stock Overview

Rewards

Trading at 56.9% below our estimate of its fair value

Earnings are forecast to grow 68.34% per year

Risk Analysis

Debt is not well covered by operating cash flow

High level of non-cash earnings

Volatile share price over the past 3 months

IRICO Group New Energy Competitors

Tongda Group Holdings

SEHK:698

HK$1.2b

Yeebo (International Holdings)

SEHK:259

HK$3.0b

Gold Peak Technology Group

SEHK:40

HK$576.7m

Truly International Holdings

SEHK:732

HK$5.5b

Price History & Performance

Summary of all time highs, changes and price drops for IRICO Group New Energy
Historical stock prices
Current Share Price	HK$9.11
52 Week High	HK$35.35
52 Week Low	HK$8.02
Beta	0.21
1 Month Change	-15.80%
3 Month Change	8.32%
1 Year Change	-72.01%
3 Year Change	-18.66%
5 Year Change	-32.02%
Change since IPO	-60.55%

Recent News & Updates

Jul 25

Here's What To Make Of IRICO Group New Energy's (HKG:438) Decelerating Rates Of Return

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for...

Shareholder Returns

	438	HK Electronic	HK Market
7D	0.7%	-0.4%	-0.6%
1Y	-72.0%	-39.3%	-23.8%

Return vs Industry: 438 underperformed the Hong Kong Electronic industry which returned -39.3% over the past year.

Return vs Market: 438 underperformed the Hong Kong Market which returned -23.8% over the past year.

Price Volatility

Is 438's price volatile compared to industry and market?
438 volatility
438 Average Weekly Movement	9.9%
Electronic Industry Average Movement	6.9%
Market Average Movement	6.5%
10% most volatile stocks in HK Market	12.8%
10% least volatile stocks in HK Market	3.1%

Stable Share Price: 438 is more volatile than 75% of Hong Kong stocks over the past 3 months, typically moving +/- 10% a week.

Volatility Over Time: 438's weekly volatility (10%) has been stable over the past year, but is still higher than 75% of Hong Kong stocks.

About the Company

Founded	Employees	CEO	Website
2004	1,844	Xiaofei Tong	https://www.irico.com.cn

IRICO Group New Energy Company Limited, together with its subsidiaries, engages in the research and development, production, and sale of new energy photovoltaic glass in the People’s Republic of China and internationally. The company also offers solar cells and components. In addition, it is involved in photovoltaic power generation.

IRICO Group New Energy Fundamentals Summary

How do IRICO Group New Energy's earnings and revenue compare to its market cap?
438 fundamental statistics
Market Cap	CN¥1.34b
Earnings (TTM)	CN¥162.60m
Revenue (TTM)	CN¥2.07b

8.5x

P/E Ratio

0.7x

P/S Ratio

Is 438 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
438 income statement (TTM)
Revenue	CN¥2.07b
Cost of Revenue	CN¥1.67b
Gross Profit	CN¥397.60m
Other Expenses	CN¥234.99m
Earnings	CN¥162.60m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	0.92
Gross Margin	19.23%
Net Profit Margin	7.87%
Debt/Equity Ratio	80.7%

How did 438 perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is 438 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 438?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 438. This is calculated by dividing 438's market cap by their current preferred multiple.
What is 438's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CN¥1.34b

438 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	1.1x
Enterprise Value/EBITDA	5.8x
PEG Ratio	0.1x

Price to Earnings Ratio vs Peers

How does 438's PE Ratio compare to its peers?

438 PE Ratio vs Peers

The above table shows the PE ratio for 438 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	6x
698 Tongda Group Holdings	5.5x	22.5%	HK$1.2b
259 Yeebo (International Holdings)	11.3x	n/a	HK$3.0b
40 Gold Peak Technology Group	3.9x	n/a	HK$576.7m
732 Truly International Holdings	3.8x	12.5%	HK$5.5b
438 IRICO Group New Energy	8.5x	68.3%	HK$1.6b

Price-To-Earnings vs Peers: 438 is expensive based on its Price-To-Earnings Ratio (8.5x) compared to the peer average (6x).

Price to Earnings Ratio vs Industry

How does 438's PE Ratio compare vs other companies in the HK Electronic Industry?

Price-To-Earnings vs Industry: 438 is expensive based on its Price-To-Earnings Ratio (8.5x) compared to the Hong Kong Electronic industry average (7.2x)

Price to Earnings Ratio vs Fair Ratio

What is 438's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

438 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	8.5x
Fair PE Ratio	23.4x

Price-To-Earnings vs Fair Ratio: 438 is good value based on its Price-To-Earnings Ratio (8.5x) compared to the estimated Fair Price-To-Earnings Ratio (23.4x).

Share Price vs Fair Value

What is the Fair Price of 438 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 438 (HK$9.11) is trading below our estimate of fair value (HK$21.16)

Significantly Below Fair Value: 438 is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Insufficient data to show price forecast.

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Future Growth

How is IRICO Group New Energy forecast to perform in the next 1 to 3 years based on estimates from 1 analyst?

Future Growth Score

6/6

Future Growth Score 6/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

68.3%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: 438's forecast earnings growth (68.3% per year) is above the savings rate (1.6%).

Earnings vs Market: 438's earnings (68.3% per year) are forecast to grow faster than the Hong Kong market (16.6% per year).

High Growth Earnings: 438's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: 438's revenue (52.7% per year) is forecast to grow faster than the Hong Kong market (10% per year).

High Growth Revenue: 438's revenue (52.7% per year) is forecast to grow faster than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: 438's Return on Equity is forecast to be high in 3 years time (20.6%)

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Past Performance

How has IRICO Group New Energy performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

20.3%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 438 has a high level of non-cash earnings.

Growing Profit Margin: 438's current net profit margins (7.9%) are lower than last year (8.7%).

Past Earnings Growth Analysis

Earnings Trend: 438's earnings have grown significantly by 20.3% per year over the past 5 years.

Accelerating Growth: 438's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: 438 had negative earnings growth (-26%) over the past year, making it difficult to compare to the Electronic industry average (19.5%).

Return on Equity

High ROE: 438's Return on Equity (8.5%) is considered low.

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Financial Health

How is IRICO Group New Energy's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: 438's short term assets (CN¥2.2B) do not cover its short term liabilities (CN¥2.7B).

Long Term Liabilities: 438's short term assets (CN¥2.2B) exceed its long term liabilities (CN¥549.3M).

Debt to Equity History and Analysis

Debt Level: 438's net debt to equity ratio (42.3%) is considered high.

Reducing Debt: 438's debt to equity ratio has reduced from 1353.6% to 80.7% over the past 5 years.

Debt Coverage: 438's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: 438's interest payments on its debt are well covered by EBIT (4.1x coverage).

Balance Sheet

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Dividend

What is IRICO Group New Energy current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

14.66%

Forecast Dividend Yield

Dividend Yield vs Market

Notable Dividend: Unable to evaluate 438's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate 438's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if 438's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if 438's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as 438 has not reported any payouts.

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Management

How experienced are the management team and are they aligned to shareholders interests?

2.7yrs

Average management tenure

CEO

Xiaofei Tong (44 yo)

1.58yrs

Tenure

CN¥719,752

Compensation

Mr. Xiaofei Tong serves as Chairman at IRICO Group New Energy Company Limited since November 18, 2021. He serves as Executive Director at IRICO Group New Energy Company Limited since January 20, 2020 and w...

CEO Compensation Analysis

Compensation vs Market: Xiaofei's total compensation ($USD107.05K) is below average for companies of similar size in the Hong Kong market ($USD305.74K).

Compensation vs Earnings: Xiaofei's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.

Leadership Team

Experienced Management: 438's management team is considered experienced (2.7 years average tenure).

Board Members

Experienced Board: 438's board of directors are not considered experienced ( 0.8 years average tenure), which suggests a new board.

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/11 00:00
End of Day Share Price	2022/08/11 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31