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China Automotive Systems (CAAS)
NASDAQ:CAAS
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China Automotive Systems
(NASDAQ:CAAS)
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Rating:70Outperform
Price Target:
$4.50
▼(-8.16% Downside)
China Automotive Systems demonstrates strong revenue growth and strategic market expansion, particularly in the EPS segment and international markets, which are key strengths. The stock's undervaluation presents an opportunity for investors. However, challenges in cash flow management and decreased gross profit margins are notable risks. The overall outlook is positive but cautious, with a focus on improving cash flow and managing operational challenges.
China Automotive Systems (CAAS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$147.84M
Dividend YieldN/A
Average Volume (3M)60.41K
Price to Earnings (P/E)5.0
Beta (1Y)0.57
Revenue Growth17.08%
EPS Growth-18.03%
CountryUS
Employees4,370
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Parts
Share Statistics
EPS (TTM)0.25
Shares Outstanding30,170,702
10 Day Avg. Volume69,995
30 Day Avg. Volume60,406
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.25
Enterprise Value/Revenue0.27
Enterprise Value/Gross Profit1.63
Enterprise Value/Ebitda2.77
Forecast
1Y Price Target
$4.50Price Target Upside-8.16% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering1
China Automotive Systems Business Overview & Revenue Model
Company DescriptionChina Automotive Systems, Inc., through its subsidiaries, manufactures and sells automotive systems and components in the People's Republic of China. It produces rack and pinion power steering gears for cars and light-duty vehicles; integral power steering gears for heavy-duty vehicles; power steering parts for light duty vehicles; sensor modules; automobile steering systems and columns; and automobile electronic and hydraulic power steering systems and parts. The company also offers automotive motors and electromechanical integrated systems; polymer materials; and intelligent automotive technology research and development services. In addition, it provides after sales services, and research and development support services, as well as markets automotive parts in North America and Brazil. The company primarily sells its products to the original equipment manufacturing customers. China Automotive Systems, Inc. was incorporated in 1999 and is headquartered in Jingzhou, the People's Republic of China.
How the Company Makes MoneyChina Automotive Systems generates revenue primarily through the sale of its automotive components, particularly its power steering systems. The company has established key revenue streams by supplying major automotive manufacturers, both in China and abroad, leveraging long-term partnerships and contracts with these clients. Additionally, CAAS benefits from increasing demand for advanced automotive technology, as the industry shifts towards more electric and automated vehicles. The company's focus on research and development also allows it to innovate and introduce new products, which can lead to additional revenue opportunities. Overall, CAAS's financial success is supported by its strategic alliances, efficient production processes, and a strong presence in the growing automotive market.
China Automotive Systems Earnings Call Summary
Earnings Call Date:Aug 13, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 12, 2025
Earnings Call Sentiment Neutral
The earnings call highlights significant revenue growth, especially in the EPS segment and international markets, alongside strategic moves like new product launches. However, challenges such as decreased gross profit margin and increased tax expenses present concerns. The overall sentiment is balanced with positive growth tempered by operational challenges.Q2-2025 Updates
Positive Updates
Revenue Growth
Sales increased by 11.1% year-over-year to $176.2 million in Q2 2025, with significant growth in electric power steering systems (EPS), which rose by 31.1% year-over-year.
EPS Product Success
Electric power steering systems now account for 41.2% of total sales, up from 35.1% in the previous year, indicating a successful shift towards higher technology products.
Expansion in Brazil and North America
Brazilian sales increased by 49.4% year-over-year, accounting for 10.1% of total sales, while North American sales rose by 14.9%, driven by demand from Stellantis.
Net Cash Increase
Net cash provided by operating activities rose by almost $40 million year-over-year to $49.1 million for the first 6 months of 2025.
New Product Launch
The second-generation IRCB is now in mass production in China, setting a new record in the power steering industry for ramp-up to mass production.
Negative Updates
Decreased Gross Profit Margin
Gross profit margin decreased to 17.3% in Q2 2025 from 18.5% in Q2 2024, mainly due to increased tariffs and a shift to lower-margin products.
Increased Income Tax Expense
Income tax expense increased to $4 million from $2.1 million in the same quarter of the previous year due to higher pre-tax income and a higher effective tax rate.
Lower Other Income
Other income decreased to $1.1 million in Q2 2025 from $1.7 million in Q2 2024.
Potential Regulatory Challenges
The move to the Cayman Islands is aimed at reducing costs and gaining business flexibility, but it might involve regulatory and operational complexities.
Company Guidance
In the second quarter of 2025, China Automotive Systems reported a strong financial performance with sales increasing by 11.1% year-over-year to $176.2 million, driven by a significant 31.1% rise in electric power steering systems (EPS) sales. The company's gross profit grew by 4.2% to $30.5 million, although the gross profit margin slightly decreased to 17.3% due to changes in product mix and increased tariffs. Operating expenses were well managed, with a notable decrease in general and administrative expenses by $2 million, which contributed to a 20.2% rise in income from operations. Net income attributable to shareholders increased to $7.6 million, translating to earnings per share of $0.25. The company also highlighted robust growth in international markets, with North and South American sales accounting for 27.5% of total sales, thanks to increased demand in Brazil and North America. Looking forward, management has raised the full fiscal year 2025 revenue guidance to $720 million, reflecting optimism based on current market conditions and strategic investments in R&D, particularly in EV-related products.China Automotive Systems Financial Statement Overview
Summary
China Automotive Systems demonstrates strong revenue growth and stable profitability with consistent EBIT and EBITDA margins. However, increased leverage and cash flow challenges, including negative free cash flow, pose risks. The company shows potential for continued growth but must address these issues to strengthen its financial position.Income Statement
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.75
Positive
Balance Sheet
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.70
Positive
Cash Flow
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.60
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 678.63M | 650.93M | 576.35M | 529.55M | 497.99M | 417.64M |
| Gross Profit | 113.70M | 109.18M | 103.75M | 83.39M | 72.08M | 55.34M |
| EBITDA | 66.78M | 66.51M | 68.18M | 49.99M | 37.34M | 11.72M |
| Net Income | 28.83M | 29.98M | 37.66M | 21.18M | 4.39M | -14.36M |
Balance Sheet | ||||||
| Total Assets | 845.35M | 850.58M | 766.44M | 714.35M | 716.76M | 707.56M |
| Cash, Cash Equivalents and Short-Term Investments | 65.24M | 84.52M | 125.74M | 134.08M | 133.45M | 107.39M |
| Total Debt | 162.58M | 168.52M | 142.51M | 46.68M | 129.74M | 44.51M |
| Total Liabilities | 446.19M | 460.79M | 398.02M | 386.94M | 379.32M | 387.64M |
| Stockholders Equity | 357.55M | 349.57M | 344.46M | 311.65M | 321.03M | 303.22M |
Cash Flow | ||||||
| Free Cash Flow | -32.84M | -34.68M | -1.77M | 27.54M | 18.37M | 40.86M |
| Operating Cash Flow | 17.41M | 9.78M | 19.91M | 48.02M | 28.27M | 57.43M |
| Investing Cash Flow | -64.67M | -77.93M | -28.64M | -32.74M | 2.96M | -23.76M |
| Financing Cash Flow | 3.37M | 17.36M | 6.80M | -1.58M | -3.12M | -19.83M |
China Automotive Systems Technical Analysis
Positive
4.90
Price Trends
4.31
Positive
4.24
Positive
4.20
Positive
Market Momentum
0.19
Negative
64.58
Neutral
69.08
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 4.9 is above the 20-day moving average (MA) of 4.64, above the 50-day MA of 4.31, and above the 200-day MA of 4.20, indicating a bullish trend. The MACD of 0.19 indicates Negative momentum. The RSI at 64.58 is Neutral, neither overbought nor oversold. The STOCH value of 69.08 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | 278.28M | 14.62 | 8.43% | ― | 5.08% | 12.98% | |
70 Outperform | $147.84M | 5.04 | 8.04% | ― | 17.08% | -18.03% | |
68 Neutral | 321.44M | 211.59 | 0.64% | ― | 6.59% | ― | |
55 Neutral | 341.32M | -4.06 | -80.08% | ― | 17.32% | 37.70% | |
53 Neutral | 210.89M | -7.01 | -11.42% | ― | -6.99% | -1688.02% | |
43 Neutral | 3.30M | >-0.01 | -638.38% | ― | -8.31% | -56.03% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% |
* Consumer Cyclical Sector Average
Performance Comparison
CAAS
China Automotive Systems
4.90
0.30
6.52%
MPAA
Motorcar Parts Of America
16.61
9.22
124.76%
SRI
Stoneridge
7.53
-3.66
-32.71%
STRT
Strattec Security
66.89
24.23
56.80%
SSUP
Superior Industries International
0.09
-2.95
-97.04%
INVZ
Innoviz Technologies
1.70
0.87
104.82%
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.