Value
8.2/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 6.0 |
| P/S | 10.0 |
| Fwd P/E | 9.0 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 11.7x
- ▸PEG: 0.35
- ▸Attractively valued
CYD · Why this verdict
Why China Yuchai International Limi (CYD) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score6.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
China Yuchai screens attractively on valuation — a forward P/E of 13.1x and a PEG below 0.5 — backed by exceptional free cash flow conversion and 23% revenue growth; the investment case is tempered by business quality sitting at its minimum acceptable threshold and only 5% upside to consensus in the near term.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue expanding at approximately 23% year-over-year provides the fundamental driver for a potential valuation re-rating and demonstrates that demand for the company's products remains strong. Growth breakdown | Year-over-year revenue growth remains above 15% in the next two consecutive reporting periods. | →Stable |
| CounterGrowth at this pace in a capital-intensive auto manufacturing segment can decelerate sharply once base effects normalize; a meaningful slowdown would remove the primary re-rating catalyst and leave the stock dependent solely on multiple expansion. | ||
At a forward P/E of 13.1x and a PEG of 0.40, the stock offers a meaningful discount to its growth rate — a combination rare among auto manufacturers — implying significant upside if the multiple normalizes toward peers. Valuation breakdown | The forward P/E re-rates toward 18x over 12 months as earnings growth continues to close the gap to intrinsic value. | →Stable |
| CounterThe discount may reflect the market's durable skepticism about business quality, which sits at its minimum acceptable level; without a quality improvement, the low multiple can persist indefinitely as a value trap rather than an opportunity. | ||
Free cash flow equivalent to 434% of net income signals that accounting earnings substantially understate actual cash generation, with a Piotroski score of 7 out of 9 confirming the underlying financial health of the business. Quality breakdown | Free cash flow conversion remains above 200% of net income over the next four quarters, sustaining the dividend and supporting continued capital allocation. | →Stable |
| CounterConversion ratios well above 100% can reflect temporary working capital releases or depreciation timing rather than durable cash productivity; normalization toward 100% would still be healthy but would remove an apparent quality differentiator. | ||
Three of the four most recent quarters came in ahead of estimates with an average positive surprise of roughly 39%, suggesting a pattern of consistently under-promising and over-delivering on profitability. Earnings | The next reported quarter produces a positive EPS surprise and the beat count extends over the following two periods. | →Stable |
| CounterThe single miss was severe at approximately -26%, and the earnings history dates to older fiscal periods, reducing confidence that the over-delivery pattern persists under current operating conditions. | ||
Revenue expanding at approximately 23% year-over-year provides the fundamental driver for a potential valuation re-rating and demonstrates that demand for the company's products remains strong.
→StableGrowth breakdown
- Expectation
- Year-over-year revenue growth remains above 15% in the next two consecutive reporting periods.
CounterGrowth at this pace in a capital-intensive auto manufacturing segment can decelerate sharply once base effects normalize; a meaningful slowdown would remove the primary re-rating catalyst and leave the stock dependent solely on multiple expansion.
At a forward P/E of 13.1x and a PEG of 0.40, the stock offers a meaningful discount to its growth rate — a combination rare among auto manufacturers — implying significant upside if the multiple normalizes toward peers.
→StableValuation breakdown
- Expectation
- The forward P/E re-rates toward 18x over 12 months as earnings growth continues to close the gap to intrinsic value.
CounterThe discount may reflect the market's durable skepticism about business quality, which sits at its minimum acceptable level; without a quality improvement, the low multiple can persist indefinitely as a value trap rather than an opportunity.
Free cash flow equivalent to 434% of net income signals that accounting earnings substantially understate actual cash generation, with a Piotroski score of 7 out of 9 confirming the underlying financial health of the business.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 200% of net income over the next four quarters, sustaining the dividend and supporting continued capital allocation.
CounterConversion ratios well above 100% can reflect temporary working capital releases or depreciation timing rather than durable cash productivity; normalization toward 100% would still be healthy but would remove an apparent quality differentiator.
Three of the four most recent quarters came in ahead of estimates with an average positive surprise of roughly 39%, suggesting a pattern of consistently under-promising and over-delivering on profitability.
→StableEarnings
- Expectation
- The next reported quarter produces a positive EPS surprise and the beat count extends over the following two periods.
CounterThe single miss was severe at approximately -26%, and the earnings history dates to older fiscal periods, reducing confidence that the over-delivery pattern persists under current operating conditions.
Per-dimension breakdown
Quality
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.1 |
| ROA | 1.5 |
| Gross margin | 0.0 |
| Op margin | 1.6 |
| Net margin | 1.1 |
| Current ratio | 5.2 |
| FCF quality | 10.0 |
| Moat | 6.4 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 434% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
9.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 8.2 |
| EPS growth | 10.0 |
- ▸Strong growth: 23% YoY
Momentum
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.2 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 0.0 |
- ▸Oversold in uptrend (RSI 27)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 8.9 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 35%
Insider
5.0/10data confidence 50%Peer rank
6.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.0 |
| quality rank | 7.4 |
| growth rank | 6.9 |
Technical
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.1 |
| support resistance | 8.6 |
| 52w position | 5.4 |
Risk (lower is worse)
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.7 |
| days to cover | 9.5 |
| volatility | 0.0 |
| put call | 8.0 |
| implied vol | 1.2 |
| max pain risk | 3.0 |
| beta | 5.4 |
| debt equity | 9.3 |
- ▸High IV: 73%
- ▸Above max pain $40
Catalyst
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.2 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 115.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:42d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:4.4<4.5
- ASYMMETRY:1.1<1.5@spot
Warning (0)
none
Reward-to-Risk
1.07
Upside
+14.9%
Downside
13.9%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — Beta 1.39>1.3, MCap $1.7B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Growth at 9.1 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:4.4<4.5.
The strongest dimensions are Growth at 9.1, Value at 8.2, and Technical at 7.4; the weakest are Quality at 4.0, Momentum at 4.4, and Insider at 5.0. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 1.07 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1At a forward P/E of 13.1x and a PEG of 0.40, the stock offers a meaningful discount to its growth rate — a combination rare among auto manufacturers — implying significant upside if the multiple normalizes toward peers.
Trip ifForward P/E expands above 20x for 2 consecutive quarters, eliminating the valuation discount thesis.
- P2Free cash flow equivalent to 434% of net income signals that accounting earnings substantially understate actual cash generation, with a Piotroski score of 7 out of 9 confirming the underlying financial health of the business.
Trip ifFree cash flow conversion falls below 100% of net income for 2 consecutive reporting periods.
- P3Revenue expanding at approximately 23% year-over-year provides the fundamental driver for a potential valuation re-rating and demonstrates that demand for the company's products remains strong.
Trip ifRevenue growth falls below 10% year-over-year for 2 consecutive quarters.
- P4Three of the four most recent quarters came in ahead of estimates with an average positive surprise of roughly 39%, suggesting a pattern of consistently under-promising and over-delivering on profitability.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.