Huadi International Group Co., Ltd. (NASDAQ: HUDI)

Sector: Basic Materials Industry: Steel CIK: 0001791725
Market Cap 16.47 Mn
P/B 0.22
P/E -11.80
P/S 0.26
ROIC (Qtr) 0.00
Div Yield % 0.00
Rev 1y % (Qtr) 0.00
Total Debt (Qtr) 22.34 Mn
Debt/Equity (Qtr) 0.30
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About

Huadi International Group Co., Ltd., a company listed on the US stock exchange under the ticker symbol HUDI, is a prominent player in the stainless steel seamless pipes and related products industry. The company's operations span a wide range of activities, including research and development, manufacturing, sales and marketing, and customer service. Huadi International's main business activities revolve around the production and sale of stainless steel seamless pipes, fittings, and flanges. These products are manufactured using advanced technology...

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Investment thesis

Bull case

  • Operating cash flow of (8.48M) provides exceptional 1739.98x coverage of minority interest expenses (4874), showing strong core operations.
  • Operating cash flow of (8.48M) provides exceptional 38.44x coverage of interest expenses (220621), showing strong debt service capability.
  • Strong tangible asset base of 105.31M provides 4.71x coverage of total debt 22.34M, indicating robust asset backing and low credit risk.
  • Free cash flow of (9.92M) provides exceptional 44.97x coverage of interest expense (220621), showing strong debt service ability.
  • Long-term investments of 11.82M provide solid 1.47x coverage of long-term debt 8.03M, indicating strategic financial planning.

Bear case

  • Operating cash flow of (8.48M) barely covers its investment activities of (14.97M), with a coverage ratio of 0.57, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (14.97M) provide weak support for R&D spending of 2.17M, which is -6.91x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 9.73M provide limited coverage of acquisition spending of (13.27M), which is -0.73x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of (8.48M) shows concerning coverage of stock compensation expenses of 29400, with a -288.46 ratio indicating potential earnings quality issues.
  • Free cash flow of (9.92M) provides weak coverage of capital expenditures of 1.44M, with a -6.89 ratio suggesting additional external financing needs for growth initiatives.

Peer comparison

Companies in the Steel
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NUE Nucor Corp 58.33 Bn 74.96 2.91 6.85 Bn
2 STLD Steel Dynamics Inc 40.60 Bn 83.81 4.34 3.78 Bn
3 RS Reliance, Inc. 26.37 Bn 77.34 2.59 1.69 Bn
4 PKX Posco Holdings Inc. 19.54 Bn 56.38 0.39 19.69 Bn
5 CMC COMMERCIAL METALS Co 9.18 Bn 198.05 2.39 3.35 Bn
6 CLF Cleveland-Cliffs Inc. 5.34 Bn -3.62 0.29 7.25 Bn
7 WS Worthington Steel, Inc. 2.24 Bn 18.89 0.72 0.28 Bn
8 MTUS Metallus Inc. 0.97 Bn -116.67 0.86 0.02 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.16 1.89
EV to Cash from Ops. EV/CFO -2.13 4.54
EV to Debt EV to Debt 0.81 -3.26
EV to EBIT EV/EBIT -8.55 -15.16
EV to EBITDA EV/EBITDA -7.20 -139.64
EV to Free Cash Flow [EV/FCF] EV/FCF -1.82 46.24
EV to Market Cap EV to Market Cap 1.10 -0.56
EV to Revenue EV/Rev 0.29 2.70
Price to Book Value [P/B] P/B 0.22 8.16
Price to Earnings [P/E] P/E -11.80 22.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -41.90
Dividend Payout Ratio % Dividend Payout Ratio % 0.00 41.41
Dividend per Basic Share Div per Share (Qtr) 0.00 0.99
FCF Dividend Payout Ratio % FCF Dividend Payout Ratio % 0.00 24.68
Interest Coverage Interest Coverage 9.57 10.33
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex Growth (1y) % -366.76 -25.11
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -56.83 72.27
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 24.03
EBIAT Growth (1y) % EBIAT Growth (1y) % -597.48 -69.57
EBITDA Growth (1y) % EBITDA Growth (1y) % -164.57 -69.57
EBIT Growth (1y) % EBIT Growth (1y) % -474.47 -69.73
EBT Growth (1y) % EBT Growth (1y) % -1,073.00 -89.44
EPS Growth (1y) % EPS Growth (1y) % -1,100.00 -67.10
FCF Growth (1y) % FCF Growth (1y) % -178.21 -11.81
Gross Profit Growth (1y) % Gross Profit Growth (1y) % -7.15 -592.10
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Utilization Ratio 0.57 0.83
Cash Payout Ratio Cash Payout Ratio 0.00 0.30
Cash Ratio Cash Ratio (Qtr) 0.40 11.50
Current Ratio Curr Ratio (Qtr) 2.89 15.74
Debt to Equity Ratio Debt/Equity (Qtr) 0.30 0.62
Interest Cover Ratio Interest Cover Ratio 9.57 10.33
Times Interest Earned Times Interest Earned 9.57 10.33
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % -2.30 -0.83
EBIT Margin % EBIT Margin % -3.36 571.21
EBT Margin % EBT Margin % -3.01 -4.72
Gross Margin % Gross Margin % 10.80 17.71
Net Profit Margin % Net Profit Margin % -2.20 -4.68