Chongqing Machinery & Electric Co. Ltd. Class H (2722) AI Stock Analysis

• Market Cap: HK$9.03B
• Dividend Yield: 2.5%
• Average Volume (3M): 15.79M
• Price to Earnings (P/E): 14.7
• Beta (1Y): 0.90
• Revenue Growth: 11.18%
• EPS Growth: 46.57%
• Country: HK
• Employees: 7,880
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 0.12
• Shares Outstanding: 1,100,187,500
• 10 Day Avg. Volume: 18,634,000
• 30 Day Avg. Volume: 15,787,047
• PEG Ratio: 0.12
• Price to Book (P/B): 0.33
• Price to Sales (P/S): 0.30
• P/FCF Ratio: 5.17
• 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: HK$2.91
• Price Target Upside: 55.61% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 73 Outperform
• Price Target: HK$3.00 ▲(60.43% Upside)

The score is driven primarily by improving fundamentals (revenue growth, better net margins, reduced leverage, and much stronger operating cash flow) and strong technical trend indicators (price above major moving averages and positive MACD). Valuation is supportive but only moderate given the P/E of 14.11 and a ~1.98% dividend yield, while declining gross/EBITDA margins and only moderate cash conversion temper the overall rating.

Positive Factors

Revenue Growth

Sustained top-line expansion indicates ongoing demand for the company’s machinery products and supports scale advantages. Over 2–6 months this growth underpins reinvestment capacity, improves bargaining power with suppliers, and provides a firmer base to restore or expand margins and fund strategic initiatives.

Improved Cash Generation

A large improvement in operating cash flow and a switch to positive free cash flow materially strengthen liquidity and financial flexibility. This durable change lowers refinancing needs, enables capex or dividends from internal funding, and reduces vulnerability to cyclical revenue swings.

Lower Leverage / Strong Equity Base

Reduced leverage and a healthy equity ratio improve balance-sheet resilience and borrowing capacity. Over the medium term this supports capital allocation optionality, cushions downturns, and allows the firm to pursue strategic investments or absorb shocks without compromising operations.

Negative Factors

Margin Compression

Declining gross and EBITDA margins signal cost pressures or worsening pricing mix that can persist beyond a quarter. If structural, margin erosion undermines the company’s ability to convert revenue into sustainable profits, constraining free cash flow and long-term return on invested capital.

Moderate FCF Conversion

Despite positive free cash flow, only moderate conversion from net income limits the firm’s durable self-funding capacity. Over months this can restrict discretionary spending, slow deleveraging or dividend increases, and make the company more sensitive to profit volatility or working capital swings.

Decreasing Gross Profit

A year-over-year drop in gross profit points to structural margin or volume mix issues—such as rising input costs or competitive pricing—that can erode long-term equity growth. Persistent gross profit declines will pressure margins, cash flow and the company’s capacity to invest for growth.

Chongqing Machinery & Electric Co. Ltd. Class H Business Overview & Revenue Model

Company Description

Chongqing Machinery & Electric Co., Ltd., together with its subsidiaries, designs, manufactures, and sells clean energy equipment and high-end smart manufacturing equipment. It manufactures and sells engines, hydroelectric generation equipment, electrical wires and cables, general machinery, machinery tools, high-voltage transformers, and other products. The company also designs, manufactures, and sells vehicle parts and components; industrial robots, intelligent equipment, etc.; processes electronic products; develops, produces, and leases laser, machinery, and testing equipment; turbines, governors, and auxiliary devices; gear processing machine tools and lathes; automation, intelligent equipment, and accessories; provides cotton picking services and maintains cotton machinery and spare parts; cutting tool; casting and forging of non-ferrous metal smelting and special metal smelting; electrical porcelain; agricultural machinery and accessories, special machine tools, spare parts, and special tooling; precision screw; multi-purpose CNC machine tools, roll grinders, and deep hole boring machines. In addition, it leases properties; engages in turbo mechanical product testing, equipment, and system maintenance and transformation; sewage collection, treatment, and operation management BOT business; other trade business; trades in machinery and raw materials; fan coolers; evaporative cooling, water-cooled, and air-cooled chillers; manufactures wind-power equipment, PPR\PPC tubular product, and gas compressors and components; sells network, environmental, and gas products; design and manufactures industrial pumps and parts, and pressure vessels; mechanical and electrical equipment technology; and sells steel, as well as provides loans. The company was founded in 2007 and is headquartered in Chongqing, the People's Republic of China. Chongqing Machinery & Electric Co., Ltd. is a subsidiary of Chongqing Machinery and Electronics Holding (Group) Co., Ltd.

How the Company Makes Money

Chongqing Machinery & Electric Co. Ltd. generates revenue through multiple streams including the sale of machinery and electrical equipment, customized industrial solutions, and after-sales services. A significant portion of its earnings comes from contracts with government sectors and large enterprises for infrastructure projects, particularly in power generation and transportation. The company also benefits from strategic partnerships with global firms that enhance its technological capabilities and market reach. Additionally, the growing demand for automation and renewable energy solutions has opened new avenues for revenue, contributing to its overall financial performance.

Chongqing Machinery & Electric Co. Ltd. Class H Financial Statement Overview

Summary

Financials show solid momentum: revenue grew 10.68% (2023 to 2024) and net profit margin improved to 4.83% from 3.77%. Leverage is moderate and improving (debt-to-equity 0.30; equity ratio 45.81%), and operating cash flow surged with free cash flow turning positive. Offsetting these positives, gross profit/EBITDA margins softened and cash conversion (FCF vs. net income) is only moderate.

Income Statement

Chongqing Machinery & Electric Co. Ltd. Class H has shown a consistent revenue growth, with a 10.68% increase from 2023 to 2024. The gross profit margin for 2024 is 15.15%, and the net profit margin improved to 4.83% from 3.77% in 2023, indicating enhanced profitability. However, the gross profit and EBITDA margins have slightly declined, which could be an area of concern.

Balance Sheet

The company's balance sheet reflects a solid equity base with an equity ratio of 45.81% in 2024. The debt-to-equity ratio has decreased to 0.30, signifying lower leverage. However, there is a notable decrease in gross profit over the last year which could impact future equity growth.

Cash Flow

Operating cash flow has significantly improved, with a 392.63% increase from 2023 to 2024. Free cash flow has also turned positive, indicating better cash management. Nevertheless, the free cash flow to net income ratio is moderate, suggesting room for improvement in cash generation relative to profits.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	9.35B	8.92B	8.06B	7.21B	7.41B	6.37B
Gross Profit	1.40B	1.35B	1.51B	1.37B	1.49B	1.31B
EBITDA	441.51M	394.12M	526.78M	525.89M	543.76M	222.81M
Net Income	577.15M	431.28M	303.63M	310.30M	296.51M	182.97M
Balance Sheet
Total Assets	18.83B	17.62B	17.49B	17.22B	16.74B	16.62B
Cash, Cash Equivalents and Short-Term Investments	2.42B	3.32B	2.65B	2.70B	2.18B	1.74B
Total Debt	3.95B	2.41B	4.39B	2.97B	2.94B	4.04B
Total Liabilities	9.95B	9.03B	9.25B	9.20B	8.92B	9.15B
Stockholders Equity	8.37B	8.07B	7.71B	7.56B	7.35B	7.02B
Cash Flow
Free Cash Flow	259.18M	515.68M	-50.80M	238.45M	261.58M	70.20M
Operating Cash Flow	453.69M	718.30M	145.76M	310.20M	383.75M	171.52M
Investing Cash Flow	319.92M	47.80M	235.32M	438.25M	541.66M	217.24M
Financing Cash Flow	-348.55M	-846.11M	-366.54M	-348.01M	-416.20M	-577.48M

Chongqing Machinery & Electric Co. Ltd. Class H Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1.87
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:2722, the sentiment is Positive. The current price of 1.87 is below the 20-day moving average (MA) of 2.26, below the 50-day MA of 2.06, and above the 200-day MA of 1.63, indicating a bullish trend. The MACD of 0.12 indicates Negative momentum. The RSI at 63.70 is Neutral, neither overbought nor oversold. The STOCH value of 82.83 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:2722.

Chongqing Machinery & Electric Co. Ltd. Class H Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
1286	75 Outperform	HK$12.10B	17.71	14.15%	3.23%	2.87%	17.03%
1133	74 Outperform	€44.35B	18.43	15.06%	1.44%	34.78%	98.79%
2722	73 Outperform	HK$9.03B	14.70	7.29%	2.50%	11.18%	46.57%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
0558	60 Neutral	HK$4.56B	13.56	17.97%	2.25%	14.32%	-19.44%
0658	45 Neutral	HK$2.98B	-0.45	-69.18%	―	-4.88%	-860.80%
0187	42 Neutral	HK$6.52B	-508.75	-0.43%	―	7.11%	77.53%

Chongqing Machinery & Electric Co. Ltd. Class H Corporate Events

Chongqing Machinery & Electric Sets Line-Up and Roles for Seventh-Term Board

Chongqing Machinery & Electric Co., Ltd. has announced the composition of its seventh-session board of directors and detailed the roles of each director across its key governance committees. The board comprises three executive directors, three non-executive directors and four independent non-executive directors, with Chairman and General Manager Yue Xiangjun also chairing the Strategy and Nomination Committees, and independent directors taking leading roles in the Audit and Risk Management, Remuneration and other oversight functions. The clarified structure and allocation of committee responsibilities strengthen the company’s corporate governance framework, signaling a continued emphasis on oversight, risk management and strategic planning that may influence how investors and other stakeholders assess its management and control environment.

The most recent analyst rating on (HK:2722) stock is a Hold with a HK$2.00 price target. To see the full list of analyst forecasts on Chongqing Machinery & Electric Co. Ltd. Class H stock, see the HK:2722 Stock Forecast page.

Chongqing Machinery & Electric Consolidates Leadership as Board Elects Yue Xiangjun Chairman

Chongqing Machinery & Electric Co., Ltd. has appointed 49-year-old senior engineer Yue Xiangjun as chairman of its seventh board session, following a nomination from its controlling shareholder and approval at an interim board meeting on 12 January 2026, with his term running until the end of the current board’s tenure. Yue, already the company’s party secretary, executive director and general manager, brings extensive experience across the Chongqing Machinery & Electronics group and related affiliates, and will receive a remuneration package aligned with the company’s director pay framework, signaling a consolidation of leadership that may enhance strategic continuity and governance stability for the state-backed industrial group and its stakeholders.

The most recent analyst rating on (HK:2722) stock is a Hold with a HK$2.00 price target. To see the full list of analyst forecasts on Chongqing Machinery & Electric Co. Ltd. Class H stock, see the HK:2722 Stock Forecast page.

Chongqing Machinery & Electric Co. Announces Asset Transfer Agreement with Zhuoyue Company

Chongqing Machinery & Electric Co., Ltd. has entered into an Asset Transfer Agreement with Zhuoyue Company, a wholly-owned subsidiary of its Controlling Shareholder, to sell the Target Asset Package of Shengpu Technology for RMB4,885,400. This transaction is classified as a connected transaction under the Listing Rules, requiring annual review, reporting, and announcement, but exempt from circular and independent shareholders’ approval. The disposal involves transferring specific assets and liabilities related to the Chongqing Machinery and Electric Procurement Trading Platform.

The most recent analyst rating on (HK:2722) stock is a Hold with a HK$2.00 price target. To see the full list of analyst forecasts on Chongqing Machinery & Electric Co. Ltd. Class H stock, see the HK:2722 Stock Forecast page.

Chongqing Machinery & Electric Co. Strengthens Investor Relations and Projects Robust Growth

Chongqing Machinery & Electric Co., Ltd. recently conducted reverse roadshow investor engagement activities to enhance communication with investors. These activities provided insights into the company’s operations and future outlook, highlighting its steady growth trajectory and progress in major projects. The company expects to achieve solid year-on-year growth in operating revenue and total profit by the end of 2025. Key developments include advancements in nuclear power pump technology, mass production of wind turbine blades, and upgrades in motor-specific electromagnetic wire production. Subsidiaries like Chongqing Cummins and Chongqing Hitachi Energy are also projected to perform well, with significant growth in emerging markets and infrastructure investments.

The most recent analyst rating on (HK:2722) stock is a Hold with a HK$2.00 price target. To see the full list of analyst forecasts on Chongqing Machinery & Electric Co. Ltd. Class H stock, see the HK:2722 Stock Forecast page.

Chongqing Machinery & Electric Co., Ltd. Establishes Audit Committee to Enhance Governance

Chongqing Machinery & Electric Co., Ltd. has announced the establishment of an Audit Committee as part of its board of directors. This committee will consist of three or more non-executive directors, with a majority being independent non-executive directors. The committee is tasked with overseeing financial management and ensuring compliance with regulatory requirements, which is expected to enhance the company’s governance and operational transparency.

The most recent analyst rating on (HK:2722) stock is a Hold with a HK$2.00 price target. To see the full list of analyst forecasts on Chongqing Machinery & Electric Co. Ltd. Class H stock, see the HK:2722 Stock Forecast page.