China Automotive Systems, Inc.

Diversified China-based automotive steering-systems maker delivering strong growth and cash generation with a clean balance sheet.

Strengths

• Revenue +17.6% (78th pct) and net income +43% (84th pct); OCF margin 14.6% (91st pct)
• Interest coverage 31x (100th pct), low debt/equity 0.20, positive FCF $74M
• Net margin 5.6% (77th pct), ROE 10.7% and ROA 4.3% (66th pct)

Risks

• Customer concentration (top 5 = 55%, Stellantis 21.6%) and OEM pricing pressure
• China HFCAA/PCAOB delisting overhang and declining domestic auto prices
• Gross margin 19% (38th pct) is mid-pack and exposed to raw-material costs

Notable findings

• Customer concentration~57% of revenue from one customer/distributor — In total, these five customers accounted for 56
• Strong balance sheetStrong balance sheet — $243M cash & investments