# China National Chem Engineering (601117.SHG)

Canonical: https://gigainvestors.com/s/601117.SHG

Analysis as of: 2026-10-16T07:36:52.393Z. Financial observations: FY2006–FY2025.

Listing currency: CNY. Reporting currency: CNY.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: CNY 7.05 per share; close as of 2026-10-15.

Estimated value: low CNY 18.17 per share, central CNY 23.49 per share, high CNY 26.62 per share. Buy at or below the central value CNY 23.49 per share. Valuation as of 2026-10-16T07:36:52.393Z; scenarios are not confidence intervals.

Expected annual return: 73.9% at the stated quote. About 73.9% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; CN 10-year bond 1.7% + 4 points).

## Checklist

### understandable: pass

- 1 revenue decline in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 1

- Years with a net loss: 0

- Operating margin variation: 0.07×

Chart: Operating margin; fiscal year observations.

- FY2016: 0.04×

- FY2017: 0.04×

- FY2018: 0.03×

- FY2019: 0.04×

- FY2020: 0.04×

- FY2021: 0.04×

- FY2022: 0.04×

- FY2023: 0.04×

- FY2024: 0.04×

- FY2025: 0.04×

### moat: pass

- ROIC, median of available years: 29.7%

- ROIC, second-lowest year: 14.1%

- Typical minus recent gross margin: 0.6 pp

- Typical gross margin (annual median): 10.7%

- Recent gross margin (lower of latest and 3-year median): 10.1%

- Years with nonpositive capital: 0

- Capital spending / revenue: 1.5%

- ROIC including acquisitions, ten-year median: 21.0%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: 13.6%

- FY2017: 14.1%

- FY2018: 20.6%

- FY2019: 35.5%

- FY2020: 82.5%

- FY2021: 44.6%

- FY2022: 32.0%

- FY2023: 34.8%

- FY2024: 27.4%

- FY2025: 14.6%

### economics: pass

- Owner earnings / net income, 5-yr: 0.90×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: CNY 25B

- Net income, five-year total: CNY 28B

- Return on incremental invested capital: 23.4%

- Working capital / revenue, annual change: -1.5 pp

- Working capital / revenue, change between three-year averages: -14.7 pp

- Working capital / revenue, final three-year average: 6.2%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 0.96×

- FY2022: 0.95×

- FY2023: 0.93×

- FY2024: 0.82×

- FY2025: 0.88×

### management: fail

- Historical market-dollar context (not the management verdict): 2016 to 2025 (9 years)

- potential debt-funded buybacks (informational)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: 14.1% vs 27.4%

- Per-share earnings: 0.35 to 0.93 (three-year endpoint medians)

- five-year and ten-year diluted share growth both above threshold

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: 2.0%

- Ordinary dilution, 5-year annual growth: 4.3%

- Market cap gain: CNY 12B

- Cumulative retained earnings: CNY 26B

- Diluted shares, 10-year annual growth: 2.0%

- Diluted shares, 5-year annual growth: 4.3%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value growth: 12.8%

- Per-share value change: CNY 0.58

- Per-share value, starting three-year median: CNY 0.35

- Per-share value, ending three-year median: CNY 0.93

- Buybacks concentrated in cheaper years (correlation): -0.60

- Average buyback yield: 0.6%

- Buyback history: 5 years

- Debt-funded buybacks: Yes

- Acquisition spending: CNY 3.5B

- Cumulative net income, 10 years: CNY 40B

- ROIC, first three-year median: 14.1%

- ROIC, last three-year median: 27.4%

Chart: Earnings per share; fiscal year observations.

- FY2016: CNY 0.35

- FY2017: CNY 0.32

- FY2018: CNY 0.39

- FY2019: CNY 0.65

- FY2020: CNY 0.74

- FY2021: CNY 0.72

- FY2022: CNY 0.89

- FY2023: CNY 0.89

- FY2024: CNY 0.93

- FY2025: CNY 1.06

### accounting: pass

- Sloan accruals: 2.0%

- Receivables to sales index (DSRI): 1.04×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 0.0%

- Earnings backed by cash: Yes

- Operating cash / earnings: 0.23×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.08×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -1.3%

- FY2017: -1.5%

- FY2018: -3.1%

- FY2019: -1.4%

- FY2020: -3.4%

- FY2021: 1.3%

- FY2022: 2.0%

- FY2023: -1.7%

- FY2024: -1.3%

- FY2025: 2.0%

## Holders

## Price story

Down 41% since Dec 2021 · sales +2.2%

Story as of 2026-10-16T10:00:08.267Z; price observation 2026-10-15.

Price needs cash profits to shrink 26.6% a year for ten years

### Sales · FY2024–2025

sales +2.2%; source https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/; observed 2026-10-16.

- FY2016: CNY 53B 

- FY2017: CNY 59B 

- FY2018: CNY 81B 

- FY2019: CNY 104B 

- FY2020: CNY 109B 

- FY2021: CNY 137B 

- FY2022: CNY 158B 

- FY2023: CNY 178B 

- FY2024: CNY 186B 

- FY2025: CNY 190B 

### Gross margin · FY2025

gross margin 10.7%; source https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/; observed 2026-10-16.

- FY2016: 13.9% 

- FY2017: 14.5% 

- FY2018: 11.5% 

- FY2019: 10.7% 

- FY2020: 11.0% 

- FY2021: 9.3% 

- FY2022: 9.4% 

- FY2023: 9.4% 

- FY2024: 10.1% 

- FY2025: 10.7% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in engineering & construction; annual sales are CNY 189.9 billion.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2025: revenue 189865386000; grossProfit 20242948000; margin = grossProfit / revenue.

### Why customers stay

Margins ranged from 9.4% to 10.7% during 2023–25; it earns 29.7% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2023: grossProfit / revenue = 9.4%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2024: grossProfit / revenue = 10.1%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2025: grossProfit / revenue = 10.7%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); 10-year return on capital observations [[2016,0.13646613455893758],[2017,0.14081481724011455],[2018,0.2060681804704627],[2019,0.3554000180149148],[2020,0.8254746559700681],[2021,0.4455188698942761],[2022,0.32031798289486135],[2023,0.34770204411769845],[2024,0.2743417071532753],[2025,0.14576758180430283]]; median 0.29732984502406834. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 9% gross margin through 2022 cost inflation.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); Gross margin observations: [[2021,0.09296882957451257],[2022,0.0935168911656957],[2023,0.09427798971367786]]; range within 2 percentage points.

### Where the cash goes

Spends 9.1% of cash earnings on expansion; earns 23.4% on new investment.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2016: growth capex 0; upkeep 649112283.7; owner earnings 1972739129.3. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2017: growth capex 687035704.9000001; upkeep 840798000; owner earnings 1557242000. Growth capex / owner earnings = 0.4411875000160541.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2018: growth capex 9987936.200000048; upkeep 975717233; owner earnings 1931773859. Growth capex / owner earnings = 0.005170344423839751.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2019: growth capex 0; upkeep 762842839.02; owner earnings 3359241160.98. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2020: growth capex 0; upkeep 877574847.18; owner earnings 3915730741.82. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2021: growth capex 2670907008.15; upkeep 1160937000; owner earnings 4429499422.52. Growth capex / owner earnings = 0.6029816810836124.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2022: growth capex 1759432343.48; upkeep 1281986000; owner earnings 5171118568.058. Growth capex / owner earnings = 0.34024211982838953.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2023: growth capex 1911947239.2399998; upkeep 1422406000; owner earnings 5049656616.444111. Growth capex / owner earnings = 0.3786291592608059.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2024: growth capex 909610736.9845729; upkeep 2110382994.015427; owner earnings 4652390688.388573. Growth capex / owner earnings = 0.19551469296307758.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2025: growth capex 513512964.6905465; upkeep 2150136855.3094535; owner earnings 5642481552.974546. Growth capex / owner earnings = 0.0910083550773574.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); Incremental return on capital 0.23434389388384072, from the economics test's unchanged annual inputs.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); Dividend observations: [[2016,766335556.86],[2017,877952168.31],[2018,821354344.56],[2019,725194000],[2020,922471000],[2021,1100081882],[2022,892017002],[2023,1825219495],[2024,1555281354],[2025,1749065220]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); FY2025: cash repurchases 38976127 CNY.

### Are managers owners

Insiders own 45.7% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); 601117.SHG SharesStats.PercentInsiders = 45.739000000000004 percentage points; cache date 2026-10-16.

### What the price says

The price assumes cash profits shrink 26.6% yearly over ten years; actual growth was 7.8%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16T07:36:52.393Z); Ten-year compound average after fade. Initial solved rate -0.37392708385697604. Price 7.05; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2015 owner earnings/share 0.43816984641276396 → FY2025 0.9286245487453442. Closing-price date 2026-10-15.

## Monthly share-price history (CNY per share)

- 2016-10: CNY 5.97 per share

- 2016-11: CNY 6.64 per share

- 2016-12: CNY 6.77 per share

- 2017-01: CNY 6.75 per share

- 2017-02: CNY 8.05 per share

- 2017-03: CNY 8.75 per share

- 2017-04: CNY 7.47 per share

- 2017-05: CNY 6.47 per share

- 2017-06: CNY 6.99 per share

- 2017-07: CNY 7.81 per share

- 2017-08: CNY 7.40 per share

- 2017-09: CNY 6.79 per share

- 2017-10: CNY 6.71 per share

- 2017-11: CNY 6.28 per share

- 2017-12: CNY 6.75 per share

- 2018-01: CNY 7.52 per share

- 2018-02: CNY 6.70 per share

- 2018-03: CNY 7.37 per share

- 2018-04: CNY 7.30 per share

- 2018-05: CNY 7.45 per share

- 2018-06: CNY 6.73 per share

- 2018-07: CNY 7.06 per share

- 2018-08: CNY 6.65 per share

- 2018-09: CNY 6.67 per share

- 2018-10: CNY 5.83 per share

- 2018-11: CNY 5.66 per share

- 2018-12: CNY 5.36 per share

- 2019-01: CNY 5.42 per share

- 2019-02: CNY 6.14 per share

- 2019-03: CNY 6.47 per share

- 2019-04: CNY 6.20 per share

- 2019-05: CNY 6.07 per share

- 2019-06: CNY 6.02 per share

- 2019-07: CNY 5.81 per share

- 2019-08: CNY 5.53 per share

- 2019-09: CNY 5.80 per share

- 2019-10: CNY 5.98 per share

- 2019-11: CNY 6.23 per share

- 2019-12: CNY 6.44 per share

- 2020-01: CNY 7.02 per share

- 2020-02: CNY 6.95 per share

- 2020-03: CNY 5.97 per share

- 2020-04: CNY 6.17 per share

- 2020-05: CNY 5.56 per share

- 2020-06: CNY 5.48 per share

- 2020-07: CNY 5.76 per share

- 2020-08: CNY 5.86 per share

- 2020-09: CNY 5.38 per share

- 2020-10: CNY 5.29 per share

- 2020-11: CNY 6.49 per share

- 2020-12: CNY 5.87 per share

- 2021-01: CNY 5.53 per share

- 2021-02: CNY 6.12 per share

- 2021-03: CNY 6.99 per share

- 2021-04: CNY 6.30 per share

- 2021-05: CNY 6.31 per share

- 2021-06: CNY 8.76 per share

- 2021-07: CNY 8.73 per share

- 2021-08: CNY 13.52 per share

- 2021-09: CNY 10.80 per share

- 2021-10: CNY 10.51 per share

- 2021-11: CNY 11.12 per share

- 2021-12: CNY 12.00 per share

- 2022-01: CNY 10.20 per share

- 2022-02: CNY 10.41 per share

- 2022-03: CNY 9.64 per share

- 2022-04: CNY 9.13 per share

- 2022-05: CNY 9.43 per share

- 2022-06: CNY 9.41 per share

- 2022-07: CNY 10.76 per share

- 2022-08: CNY 8.62 per share

- 2022-09: CNY 8.01 per share

- 2022-10: CNY 7.07 per share

- 2022-11: CNY 8.42 per share

- 2022-12: CNY 7.94 per share

- 2023-01: CNY 8.68 per share

- 2023-02: CNY 9.02 per share

- 2023-03: CNY 9.28 per share

- 2023-04: CNY 10.59 per share

- 2023-05: CNY 8.55 per share

- 2023-06: CNY 8.28 per share

- 2023-07: CNY 8.67 per share

- 2023-08: CNY 7.78 per share

- 2023-09: CNY 7.78 per share

- 2023-10: CNY 7.00 per share

- 2023-11: CNY 6.62 per share

- 2023-12: CNY 6.36 per share

- 2024-01: CNY 6.40 per share

- 2024-02: CNY 6.98 per share

- 2024-03: CNY 6.75 per share

- 2024-04: CNY 6.90 per share

- 2024-05: CNY 8.18 per share

- 2024-06: CNY 8.24 per share

- 2024-07: CNY 7.49 per share

- 2024-08: CNY 6.86 per share

- 2024-09: CNY 8.24 per share

- 2024-10: CNY 8.09 per share

- 2024-11: CNY 8.15 per share

- 2024-12: CNY 8.29 per share

- 2025-01: CNY 7.44 per share

- 2025-02: CNY 7.14 per share

- 2025-03: CNY 7.19 per share

- 2025-04: CNY 7.55 per share

- 2025-05: CNY 7.72 per share

- 2025-06: CNY 7.67 per share

- 2025-07: CNY 7.99 per share

- 2025-08: CNY 7.86 per share

- 2025-09: CNY 7.44 per share

- 2025-10: CNY 7.73 per share

- 2025-11: CNY 7.45 per share

- 2025-12: CNY 7.53 per share

- 2026-01: CNY 8.90 per share

- 2026-02: CNY 9.34 per share

- 2026-03: CNY 8.79 per share

- 2026-04: CNY 8.60 per share

- 2026-05: CNY 7.72 per share

- 2026-06: CNY 7.35 per share

- 2026-07: CNY 7.84 per share

- 2026-08: CNY 7.44 per share

- 2026-09: CNY 7.17 per share

- 2026-10: CNY 7.15 per share

## Annual estimated value (CNY per share)

- FY2016: low CNY 8.07 per share, central CNY 8.62 per share, high CNY 9.35 per share

- FY2017: low CNY 8.40 per share, central CNY 8.94 per share, high CNY 9.67 per share

- FY2018: low CNY 11.91 per share, central CNY 14.26 per share, high CNY 15.78 per share

- FY2019: low CNY 16.26 per share, central CNY 20.44 per share, high CNY 22.87 per share

- FY2020: low CNY 17.98 per share, central CNY 22.78 per share, high CNY 25.46 per share

- FY2021: low CNY 14.90 per share, central CNY 16.89 per share, high CNY 18.60 per share

- FY2022: low CNY 16.40 per share, central CNY 18.67 per share, high CNY 20.68 per share

- FY2023: low CNY 19.70 per share, central CNY 24.63 per share, high CNY 27.66 per share

- FY2024: low CNY 18.51 per share, central CNY 19.99 per share, high CNY 21.96 per share

- FY2025: low CNY 19.84 per share, central CNY 25.12 per share, high CNY 28.23 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.

## Reported holder observations