Value
9.1/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 7.6 |
| P/S | 10.0 |
| Fwd P/E | 9.1 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 11.5x
- ▸PEG: 0.37
- ▸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 score6.1/10
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. | ↓Deteriorating |
| 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. | ↑Improving |
| 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. | ↓Deteriorating |
| 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. | ↓Deteriorating |
| 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.
↓DeterioratingGrowth 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.
↑ImprovingValuation 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.
↓DeterioratingQuality 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.
↓DeterioratingEarnings
- 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
3.1/10data confidence 71%| Component | Sub-score |
|---|---|
| Gross margin | 0.0 |
| Op margin | 2.7 |
| Net margin | 1.4 |
| Moat | 4.9 |
| Piotroski F | 6.7 |
- ▸No competitive moat
Growth
7.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.0 |
| EPS growth | 10.0 |
Momentum
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 7.0 |
| Volume | 1.3 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
8.4/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 9.0 |
| Analyst rating | 7.1 |
| Price target | 9.5 |
- ▸LLM news sentiment: +0.80 (n=1)
- ▸Light analyst coverage (4.0) — signal dampened
- ▸Analyst upside: 48%
Insider
5.0/10data confidence 50%Peer rank
5.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 7.0 |
| quality rank | 7.1 |
| growth rank | 3.5 |
Technical
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.9 |
| support resistance | 5.1 |
| 52w position | 5.3 |
Risk (lower is worse)
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.0 |
| days to cover | 9.9 |
| volatility | 0.0 |
| put call | 6.7 |
| implied vol | 0.0 |
- ▸High IV: 82%
Catalyst
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.5 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (8)
- MOMENTUM:5.0>=4.5
- ASYMMETRY:2.5>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:EARNINGS:0.80
- EARNINGS_PROXIMITY:197d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- MOMENTUM:5.0<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
2.45
Upside
+25.8%
Downside
10.5%
Sizing output
AVOID
SetupRange Bound — RSI 54 mid-range, Bollinger mid-band
EdgeInst Constrain — Small cap ($1.8B) below institutional reach
SuitabilityAggressive — MCap $1.8B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects clean gate clearance against Value at 9.1 and asymmetric R:R of 2.45.
The strongest dimensions are Value at 9.1, Sentiment at 8.4, and Growth at 7.0; the weakest are Quality at 3.1, Insider at 5.0, and Momentum at 5.0. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 2.45 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Deep Value Low Peg
Trip ifForward P/E expands above 20x for 2 consecutive quarters, eliminating the valuation discount thesis.
- P2Exceptional Free Cash Conversion
Trip ifFree cash flow conversion falls below 100% of net income for 2 consecutive reporting periods.
- P3Strong Revenue Growth Trajectory
Trip ifRevenue growth falls below 10% year-over-year for 2 consecutive quarters.
- P4Earnings Beat Track Record
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.