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China Automotive Systems (CAAS) AI Stock Analysis

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CAAS

China Automotive Systems

(NASDAQ:CAAS)

Rating:69Neutral
Price Target:
$4.50
▲(6.38%Upside)
China Automotive Systems shows strong revenue growth and attractive valuation, but faces challenges with increasing leverage and cash flow issues. Technical indicators suggest a neutral market position. Positive earnings call highlights were tempered by regional sales declines and increased expenses.

China Automotive Systems (CAAS) vs. SPDR S&P 500 ETF (SPY)

China Automotive Systems Business Overview & Revenue Model

Company DescriptionChina Automotive Systems, Inc. (CAAS) is a leading supplier of power steering components and systems to the Chinese automotive industry and select global markets. The company operates through its subsidiaries and joint ventures to design, manufacture, and sell a comprehensive range of steering systems for the automotive market. CAAS's core products include rack and pinion power steering gears, integral power steering gears, and power steering pump units, which cater to a variety of vehicle types, including commercial vehicles, passenger cars, and heavy-duty trucks.
How the Company Makes MoneyChina Automotive Systems generates revenue primarily through the sale of its steering products to original equipment manufacturers (OEMs) and the aftermarket. The company's key revenue streams include the sale of power steering gears, power steering pumps, and steering columns. CAAS's financial performance is driven by its strategic partnerships with leading automobile manufacturers in China and internationally, which ensures a steady demand for its products. Additionally, the company's focus on innovation and development of electric power steering systems positions it to capitalize on the growing trend towards electrification in the automotive industry. Collaborations with global automotive players and expansion into international markets also contribute to its revenue growth.

China Automotive Systems Earnings Call Summary

Earnings Call Date:May 14, 2025
(Q1-2025)
|
% Change Since: 2.67%|
Next Earnings Date:Aug 08, 2025
Earnings Call Sentiment Neutral
The earnings call presented strong revenue growth, particularly in the EPS segment and Brazilian market, alongside significant advancements in product development. However, these positive aspects were counterbalanced by declines in North American sales and increased operating expenses leading to a reduction in net income.
Q1-2025 Updates
Positive Updates
Strong Revenue Growth
Net sales increased by 19.9% to $157.1 million in the first quarter of 2025 compared to $139.4 million in the first quarter of 2024.
EPS Segment Performance
Net sales of electric power steering systems (EPS) increased by 54% year-over-year to $73 million, representing 43.7% of total sales.
Expansion in Brazilian Market
Sales to the Brazilian market increased by 30.2% year-over-year due to higher demand by Stellantis.
R-EPS Product Development
The R-EPS steering product entered mass production, featuring advanced autonomous driving functions.
Strategic Awards
Shanshi Zhulong subsidiary received multiple awards for product development cooperation and supply chain reliability.
Increased Cash Flow
Net cash provided by operating activities rose 73.1% year-over-year to $18.1 million for the first quarter of 2025.
Negative Updates
Decline in North American Sales
North American sales declined by 10.3% year-over-year to $27.2 million, primarily due to lower sales to Stellantis.
Increased Operating Expenses
A 41.3% increase in operating expenses, including a 64% rise in R&D expenses, led to a 10.5% year-over-year reduction in income from operations.
Decreased Net Income
Net income attributable to parent companies' common shareholders decreased to $7.1 million from $8.2 million in the first quarter of 2024.
Higher Income Tax Expense
Income tax expense was $2.9 million for the first quarter of 2025, compared to $1.7 million for the first quarter of 2024.
Company Guidance
During the first quarter of 2025, China Automotive Systems reported a significant growth in net sales, increasing by 19.9% to $157.1 million compared to the previous year. This growth was driven by a 54% increase in sales of electric power steering systems (EPS), along with a 38.2% rise in EPS sales at their Henlong KYB subsidiary. Despite a 10.3% decline in North American sales, primarily due to reduced demand from Stellantis, the company experienced a 30.2% boost in sales in the Brazilian market. Chinese GDP grew by 5.4% year-over-year, and the automotive market saw a 47.1% increase in new energy vehicle sales. Gross profit for the company rose by 18.8% to $28.6 million, while R&D expenses surged by 64% to $8.7 million, reflecting investments in product development. The company reiterated its revenue guidance for fiscal year 2025 at $700 million, supported by advancements in autonomous driving technologies and a robust product portfolio.

China Automotive Systems Financial Statement Overview

Summary
China Automotive Systems shows strong revenue growth and stable profitability. However, the increased leverage and persistent cash flow challenges pose risks. The company must address these issues to further strengthen its financial position.
Income Statement
75
Positive
China Automotive Systems shows a consistent revenue growth trajectory, with a notable increase of 22.1% in 2023 and 8.5% in 2024 on an annual basis. The TTM data indicates a smaller growth of 4.3%. The company maintains a stable gross profit margin around 16-17%, with the TTM at 16.7%. Its net profit margin has slightly dipped to 4.2% TTM from 4.6% in 2024, but remains healthy. EBIT and EBITDA margins are stable, signaling strong operational performance.
Balance Sheet
70
Positive
The balance sheet reveals a stable equity position with an equity ratio of 42.3% TTM. The debt-to-equity ratio has increased notably to 0.98 TTM from 0.48 in 2024, indicating higher leverage, a potential risk. Return on equity is robust at 8.1% TTM, though slightly down from 8.6% in 2024, reflecting strong profitability against equity. Overall, the balance sheet reflects solid equity support but increasing leverage.
Cash Flow
60
Neutral
Cash flow analysis highlights challenges with negative free cash flow of -$22.5M TTM, although operating cash flow has improved to $17.4M. The free cash flow to net income ratio is negative, indicating cash flow issues despite profit. The operating cash flow to net income ratio at 0.60 TTM, improved from 0.33 in 2024, suggests improving cash conversion but remains a concern.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue650.93M576.35M529.55M497.99M417.64M
Gross Profit109.18M103.75M83.39M72.08M55.34M
EBITDA66.51M68.18M49.99M37.34M11.72M
Net Income29.98M37.66M21.18M4.39M-14.36M
Balance Sheet
Total Assets850.58M766.44M714.35M716.76M707.56M
Cash, Cash Equivalents and Short-Term Investments84.52M125.74M134.08M133.45M107.39M
Total Debt168.52M142.51M46.68M129.74M44.51M
Total Liabilities460.79M398.02M386.94M379.32M387.64M
Stockholders Equity349.57M344.46M311.65M321.03M303.22M
Cash Flow
Free Cash Flow-34.68M-1.77M27.54M18.37M40.86M
Operating Cash Flow9.78M19.91M48.02M28.27M57.43M
Investing Cash Flow-77.93M-28.64M-32.74M2.96M-23.76M
Financing Cash Flow17.36M6.80M-1.58M-3.12M-19.83M

China Automotive Systems Technical Analysis

Technical Analysis Sentiment
Positive
Last Price4.23
Price Trends
50DMA
4.18
Positive
100DMA
4.16
Positive
200DMA
4.22
Positive
Market Momentum
MACD
<0.01
Positive
RSI
52.19
Neutral
STOCH
24.52
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CAAS, the sentiment is Positive. The current price of 4.23 is above the 20-day moving average (MA) of 4.19, above the 50-day MA of 4.18, and above the 200-day MA of 4.22, indicating a bullish trend. The MACD of <0.01 indicates Positive momentum. The RSI at 52.19 is Neutral, neither overbought nor oversold. The STOCH value of 24.52 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CAAS.

China Automotive Systems Risk Analysis

China Automotive Systems disclosed 48 risk factors in its most recent earnings report. China Automotive Systems reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

China Automotive Systems Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$271.64M13.019.91%5.54%398.82%
69
Neutral
$125.81M4.438.05%18.33%-26.25%
67
Neutral
¥269.51B13.556.45%2.58%5.22%-11.96%
65
Neutral
$235.56M-7.17%5.53%60.54%
64
Neutral
$387.98M-65.19%28.52%41.32%
59
Neutral
$219.71M-6.63%-8.90%-346.80%
45
Neutral
$2.67M-80.07%-3.63%36.19%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CAAS
China Automotive Systems
4.23
0.18
4.44%
MPAA
Motorcar Parts Of America
12.14
6.15
102.67%
SRI
Stoneridge
7.83
-8.58
-52.29%
STRT
Strattec Security
64.41
39.11
154.58%
SSUP
Superior Industries International
0.08
-3.32
-97.65%
INVZ
Innoviz Technologies
1.92
1.11
137.04%

China Automotive Systems Corporate Events

M&A TransactionsBusiness Operations and Strategy
China Automotive Systems Announces Cayman Islands Merger
Neutral
Jun 26, 2025

On June 26, 2025, China Automotive Systems, Inc. announced a merger agreement with its subsidiary, China Automotive Systems Holdings, Inc., to redomicile in the Cayman Islands. The merger aims to streamline operations by having CAAS Cayman assume all rights and obligations of the parent company, with no interruption in business activities. The merger is subject to customary closing conditions, including shareholder and regulatory approvals, and is expected to be completed in the third quarter of 2025.

Executive/Board ChangesShareholder MeetingsBusiness Operations and Strategy
China Automotive Systems Holds Annual Stockholders Meeting
Neutral
Jun 25, 2025

On June 25, 2025, China Automotive Systems, Inc. held its annual stockholders meeting in Jingzhou City, Hubei Province, where 82.64% of the company’s common stock was represented. Key outcomes included the election of five directors, approval of executive compensation programs, extension of the stock option plan to 2035, and the appointment of PricewaterhouseCoopers Zhong Tian LLP as independent auditors, reflecting the company’s strategic focus on governance and long-term planning.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 26, 2025