One-glance verdict
Undervalued
$65.17 our estimate vs market $4.29
93% below our estimate, below the bear case
Fundamentals snapshot
China Automotive Systems, Inc.
CAAS · NCM · Consumer Cyclical · Auto Parts
Current price
$4.29
52-week range
$4.00 - $5.64
Market cap
$129.43M
Balance sheet
Healthy
34.98x Strong cushion
Net cash $23.42M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 32.9% last year.
- Reward Returns 14.7% on equity, ahead of 80% of its peers.
- Reward Free cash flow was positive in 2/10 years.
- Risk Forward P/E (6.7x) is higher than trailing (2.3x) - earnings are expected to drop.
What this company does
China Automotive Systems, Inc.
China Automotive Systems, Inc. makes and sells car parts, mainly steering systems and related components, for car manufacturers in China and other countries. The money they make comes mostly from selling these parts to big car companies that build new vehicles. This matters because their sales are tied directly to how many new cars are being produced worldwide.
How the company got here
China Automotive Systems, Inc. (CAAS) started in 1992 as a Hong Kong-based holding company focused on developing automotive component joint ventures in mainland China. Initially, it operated under Chinese ownership laws that limited the automotive market. The company grew by establishing joint ventures, with its oldest being Shashi Jiulong Power Steering, founded in 1992. CAAS went public on the NASDAQ in 2003 through a reverse merger. Over the years, it has expanded its product lines and manufacturing capabilities through strategic partnerships and acquisitions, becoming a significant supplier in China's automotive industry.
What it actually does
China Automotive Systems, Inc. designs, manufactures, and sells automotive systems and components, primarily focusing on power steering systems. These parts are crucial for the operation of both passenger cars and commercial vehicles, enabling drivers to steer the vehicle with less effort. The company supplies these components to major original equipment manufacturers (OEMs), meaning they are installed in new vehicles as they are being built.
Power Steering Systems
This is the core business of China Automotive Systems, Inc. They produce a wide range of power steering components, including rack and pinion systems for cars and light trucks, and integral power steering systems for heavier vehicles. They also manufacture electric power steering (EPS) systems, which are becoming increasingly important in modern vehicles for their efficiency and integration with advanced driver-assistance features. These systems are sold to car manufacturers to be installed in new vehicles.
Automotive Components and Electronics
Beyond power steering, CAAS also produces other essential automotive parts. This includes steering columns, which connect the steering wheel to the steering system, and various electronic components and modules that are integrated into the vehicle's overall systems. The company also works with polymer materials and provides research and development services for intelligent automotive technologies. These products are also supplied to vehicle manufacturers for use in new car production.
Aftermarket and R&D Services
China Automotive Systems also engages in providing after-sales services for automotive parts, meaning they supply components for vehicle repairs and maintenance after the initial sale. Additionally, they offer research and development support services, collaborating with universities and international partners to innovate and improve their product offerings, particularly in areas like electronic power steering. They also conduct inspection and testing of automotive products.
What management is betting on now
Management is focused on growing its leading positions in automotive power steering systems, aiming to improve overall profit margins and long-term operating profitability. They are investing in new technologies, such as electric power steering (EPS), and expanding their production capacity, including a new plant in Mexico. The company is also working to enhance its operations and business structure to achieve profitable growth and respond to evolving industry trends, like the increasing demand for high-tech steering solutions.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$-33.88M
FY2025 Q4
$74.44M
Revenue
$765.74M
Net income
$42.84M
Diluted EPS
1.42
Operating cash flow
$111.63M
Free cash flow
$74.44M
Fetching…
Sources
Revenue
$650.93M
Net income
$29.98M
Diluted EPS
0.99
Operating cash flow
$9.78M
Free cash flow
$-33.88M
Fetching…
Sources
Is it cheap or expensive?
Fair value $65.17 vs current price $4.29
Our most-likely fair value is $65.17 a share — about 1,419.2% above today's price of $4.29, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $23.4M - more cash than debt. Interest coverage 35.0x.
Net debt
$-23.42M
Interest coverage
34.98x
China Automotive Systems, Inc.'s profit covers its interest bill about 35.0 times over. which is stronger than most peers shown here and 3 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
CAAS
BASELINE
China Automotive Systems, Inc.
Total debt $74.99M Interest coverage 34.98x This is the baseline the peer rows are being compared against.
Total debt $157.62M Interest coverage -0.05x -100% vs CAAS This peer has almost no interest-payment cushion compared with CAAS.
Total debt $156.86M Interest coverage -1.25x -100% vs CAAS This peer has almost no interest-payment cushion compared with CAAS.
Total debt $232.86M Interest coverage 1.22x -97% vs CAAS Carries about 28.7x less debt cushion than CAAS.
Total debt $1.24B Interest coverage 0.93x -97% vs CAAS Carries about 37.5x less debt cushion than CAAS.
Total debt $0.00 Interest coverage 73.88x +111% vs CAAS Carries about 2.1x more debt cushion than CAAS.
What you should know
The case for and against CAAS
3 Rewards
1 Risk
Rewards
-
Revenue grew 32.9% last year.
-
Returns 14.7% on equity, ahead of 80% of its peers.
-
Free cash flow was positive in 2/10 years.
Risks
-
Forward P/E (6.7x) is higher than trailing (2.3x) - earnings are expected to drop.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
2.26x
Forward P/E
6.70x
P/B
0.29x
P/S
0.16x
EV/EBITDA
1.75x
PEG ratio
0.37x
Profitability
How much profit each dollar creates
Gross margin
20.7%
Operating margin
10.5%
Net margin
6.9%
ROE
14.7%
ROA
4.9%
Health
Liquidity and balance-sheet strength
Debt / equity
0.15x
Current ratio
1.45x
Quick ratio
0.83x
Total debt
$74.99M
Total cash
$98.41M
Growth
How the business has been compounding
Revenue TTM
$765.74M
Revenue 5Y CAGR
32.9%
EPS TTM
1.90
EPS 5Y CAGR
27.2%
Cash flow
How much cash the business throws off
Operating CF TTM
$111.63M
Free CF TTM
$71.30M
FCF margin
9.3%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
2024-07-30