China Lesso Group Holdings (2128) AI Stock Analysis

• Market Cap: HK$17.31B
• Dividend Yield: 4.22%
• Average Volume (3M): 6.95M
• Price to Earnings (P/E): 9.5
• Beta (1Y): 1.26
• Revenue Growth: -11.15%
• EPS Growth: -12.35%
• Country: US
• Employees: 20,400
• Sector: Industrials
• Sector Strength: 72
• Industry: Construction
• EPS (TTM): 0.38
• Shares Outstanding: 3,102,418,500
• 10 Day Avg. Volume: 6,820,219
• 30 Day Avg. Volume: 6,954,954
• PEG Ratio: -0.21
• Price to Book (P/B): 0.42
• Price to Sales (P/S): 0.37
• P/FCF Ratio: 5.01
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: HK$6.00 ▲(29.31% Upside)

The score is driven mainly by reasonable financial strength but with notable risks from declining revenue/margins and missing 2024 cash flow visibility. Valuation is a key positive (low P/E and meaningful dividend yield). Technically, the trend is positive, but overbought momentum signals temper the overall outlook.

Positive Factors

Brand & product breadth

Lesso’s established brand and diversified building-materials portfolio (pipes plus complementary home-improvement products) provides durable competitive advantage. A recognized brand and overlapping distribution reduce customer acquisition costs and dampen single-product cyclicality across residential, commercial and municipal channels.

Durable gross and EBITDA margins

Sustained gross margin (~26.6%) and a stable EBITDA margin (~20%) indicate persistent underlying product-level profitability and manufacturing efficiency. These margins create structural cash-generation potential that can support reinvestment, network maintenance and withstand moderate raw-material cost swings over the medium term.

Moderate leverage and equity base

A debt/equity ratio below 1.0 and ~41% equity ratio signal a conservative financial structure versus highly leveraged peers. This moderate leverage affords capacity to fund working capital, capex and strategic initiatives without immediate refinancing stress, supporting long-term operational resilience in a cyclical construction sector.

Negative Factors

Declining revenue and profitability

A meaningful revenue drop (-12.4%) alongside falling EBIT and net margins indicates structural demand weakness or lost pricing/premium product mix. Prolonged top-line contraction reduces scale economics, pressures margins and limits ability to fund long-term investments, jeopardizing sustainable earnings growth if not reversed.

Absent operating/free cash flow in 2024

Reported zero operating and free cash flow for 2024 represents a material structural risk to liquidity and financial flexibility. Without clear cash generation, the company’s ability to service debt, sustain dividends, fund capex or withstand downturns is impaired, increasing reliance on external financing or asset sales.

Falling return on equity

A decline in ROE from 10.1% to 7.1% signals reduced effectiveness in converting equity into profits. Persistently lower ROE can indicate structural margin erosion, weaker asset utilization or suboptimal capital allocation, which undermines long-term shareholder returns and may necessitate strategic changes to restore profitability.

China Lesso Group Holdings Business Overview & Revenue Model

Company Description

China Lesso Group Holdings Limited, an investment holding company, manufactures and sells piping and building materials in China and internationally. The company offers piping systems for civil buildings, municipal engineering, home decoration, and agriculture applications; sanitary ware products, doors and windows, kitchen cabinets, integrated wardrobes, and water purifiers; and quartz stones, sealants, fire protection products, and valves. It also provides water environment treatment, waste gas treatment, solid waste disposal, dangerous waste disposal, soil remediation, engineering consultancy, environmental monitoring, environmental facility protection, ocean protection, environmental investment, and basic scientific research services. The company offers its products primarily to independent distributors, civil contractors, property developers, utility companies, and municipalities. The company was founded in 1986 and is headquartered in Foshan, China. China Lesso Group Holdings Limited operates as a subsidiary of New Fortune Star Limited.

How the Company Makes Money

China Lesso Group generates revenue through the sale of a diverse array of products, primarily focusing on plastic pipes and related fittings, which are essential in construction and plumbing applications. The company has established multiple revenue streams, including direct sales to construction firms, distribution through retail channels, and exports to international markets. Key partnerships with construction companies and governmental bodies in various regions significantly contribute to its earnings. Additionally, Lesso invests in research and development to innovate and expand its product offerings, ensuring alignment with market demands and regulatory standards, which enhances its competitive edge and revenue potential.

China Lesso Group Holdings Financial Statement Overview

Summary

Profitability remains decent (2024 gross margin ~26.6%), and leverage is moderate (debt-to-equity 0.82; equity ratio 40.9%). However, revenue fell 12.4% and profitability weakened (net margin down to 6.2% and EBIT margin down to 9.2%), and the absence of operating/free cash flow figures for 2024 is a material risk to financial flexibility.

Income Statement

The income statement shows a mixed performance. The Gross Profit Margin for 2024 is approximately 26.6%, indicating good profitability. However, the Net Profit Margin declined to 6.2% from 7.7% in 2023, showing a decrease in net income efficiency. Revenue decreased by 12.4% from 2023 to 2024, suggesting challenges in maintaining sales growth. EBIT Margin also saw a decline to 9.2% from 16.5% in the previous year, while EBITDA Margin remained relatively stable at 20.1%. Overall, while profitability remains decent, declining revenue and margins signal potential areas of concern.

Balance Sheet

The balance sheet reflects a stable financial position with a Debt-to-Equity Ratio of 0.82, indicating moderate leverage. The Return on Equity (ROE) stands at 7.1%, a decrease from 10.1% in 2023, reflecting reduced profitability relative to equity. The Equity Ratio is 40.9%, showing a healthy proportion of equity in the company’s asset base. Overall, the balance sheet is strong, but reducing leverage and improving ROE would enhance financial health further.

Cash Flow

The cash flow statement highlights concerns with zero reported Operating and Free Cash Flows in 2024, compared to previous positive figures. This absence of cash flow data complicates the assessment of cash generation efficiency and financial flexibility. The Free Cash Flow to Net Income Ratio cannot be calculated for 2024, but it was positive in prior years. This lack of visibility in cash flow metrics presents a significant risk to financial stability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	25.94B	27.03B	30.87B	30.77B	32.06B	28.07B
Gross Profit	6.97B	7.19B	8.12B	8.35B	8.12B	8.37B
EBITDA	5.22B	5.44B	5.61B	5.79B	5.72B	6.20B
Net Income	1.69B	1.68B	2.37B	2.52B	3.04B	3.75B
Balance Sheet
Total Assets	56.90B	58.33B	60.03B	58.95B	54.48B	46.53B
Cash, Cash Equivalents and Short-Term Investments	4.94B	6.64B	5.17B	6.40B	7.00B	6.57B
Total Debt	19.05B	19.65B	20.70B	20.61B	18.28B	16.24B
Total Liabilities	32.11B	33.91B	35.72B	36.36B	32.68B	26.17B
Stockholders Equity	24.32B	23.84B	23.50B	21.79B	20.77B	19.84B
Cash Flow
Free Cash Flow	2.29B	2.00B	2.49B	1.26B	1.91B	747.67M
Operating Cash Flow	3.13B	3.75B	6.70B	4.57B	5.17B	2.84B
Investing Cash Flow	-200.58M	-1.71B	-4.25B	-4.55B	-5.49B	-4.26B
Financing Cash Flow	-2.72B	-1.95B	-3.04B	-504.40M	87.18M	1.56B

China Lesso Group Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 4.64
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:2128, the sentiment is Positive. The current price of 4.64 is below the 20-day moving average (MA) of 5.06, below the 50-day MA of 4.76, and above the 200-day MA of 4.51, indicating a bullish trend. The MACD of 0.32 indicates Negative momentum. The RSI at 81.11 is Negative, neither overbought nor oversold. The STOCH value of 81.07 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:2128.

China Lesso Group Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2128	71 Outperform	HK$17.31B	9.52	7.03%	4.22%	-11.15%	-12.35%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
6865	63 Neutral	HK$42.22B	71.44	1.54%	5.67%	-18.50%	-83.76%
1108	46 Neutral	HK$5.79B	-2.50	-24.93%	―	-35.74%	-1755.61%
1796	44 Neutral	HK$1.61B	-63.40	-29.77%	―	-38.13%	-74.92%
8349	41 Neutral	HK$532.00M	-74.01	-11.50%	―	-38.08%	32.95%
0713	40 Neutral	HK$324.77M	-1.30	-21.28%	―	-23.38%	-35.88%

China Lesso Group Holdings Corporate Events

China Lesso Signs Three-Year Connected Supply Deal for Electronic Accessories

China Lesso Group Holdings has entered into a three-year Accessories Co-operation Agreement with Guangdong Liansu Electric, a company indirectly wholly owned by its chairman and controlling shareholder Mr. Wong, for the possible purchase of electronic accessories from 1 January 2026 to 31 December 2028 at prices no higher than those offered by independent third parties. The arrangement is classified as a non-exempt continuing connected transaction under Hong Kong listing rules, triggering reporting and disclosure obligations but not requiring independent shareholders’ approval, underscoring the group’s continued reliance on related-party sourcing while operating within regulatory safeguards on pricing and governance.

The most recent analyst rating on (HK:2128) stock is a Hold with a HK$5.00 price target. To see the full list of analyst forecasts on China Lesso Group Holdings stock, see the HK:2128 Stock Forecast page.

China Lesso Group Announces Board Composition and Roles

China Lesso Group Holdings Limited has announced the composition of its board of directors, highlighting the roles and functions of each member. This announcement underscores the company’s commitment to strong governance and strategic oversight, potentially impacting its operational efficiency and stakeholder confidence.

The most recent analyst rating on (HK:2128) stock is a Hold with a HK$5.00 price target. To see the full list of analyst forecasts on China Lesso Group Holdings stock, see the HK:2128 Stock Forecast page.