China Yuchai International Limited (CYD): what the price assumes

In the published model solve dated 2026-Q2, anchored at $48.88, China Yuchai International Limited (CYD) is priced for +4.0% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/CYD

Headline

FieldValue
TickerCYD
CompanyChina Yuchai International Limited
Sector / IndustryIndustrials
Current price$48.88/sh
CompositionHeavy-duty engines 40% / Medium-duty engines 23% / Light-duty engines 11% / Other products and services 27% / Revenue from hospitality operations 0%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)1.9%
Operating margin today3.1%
Margin compression (value-band)-1.2pp
Implied growth4.0%
Multiple paid23x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.6pp (computed at the 7% minimum rate; the CAPM rate 6.8% sits below it).

Reconcile: at the x-ray's 9.3% required return this reads ~21.5%/yr; the models below use their own rates.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history+0.86σ
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.59x5expensive
Earnings1.54x3expensive
Relative0.68x3justifies
Growth1.20x3expensive

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.

Per-Model Detail (n=14)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$40.691.20xyesFCF base $0.1B, growth -3% (input: historical growth), terminal g 0.5%, WACC 8.7%, 5yr projection
DCF Exit MultipleGrowth$57.710.85xyesExit EV/EBITDA: 5.2x / 7.2x / 9.2x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$47.671.03xyesP/E 21.01x (blended: static sector reference 18x + trailing (TTM) 28x), scenarios: 17.9x / 21.0x / 24.2x (bear / base = reference held flat / bull), EV/EBITDA 12x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$18.842.59xyesBV/sh $43.60, ROE (TTM) 4.0%, ke 9.3%
Two-Stage Excess ReturnAsset$12.024.07xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$36.401.34xyesRev $2.7B, growth -3% (input: historical growth; tapered), Terminal P/S: 0.6x / 0.7x / 0.8x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$51.160.96xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.11B × (1−21%) / WACC 8.7% → EPV (no growth)
Residual IncomeAsset$9.545.12xyesBV $43.60 + 5yr PV of (ROE (TTM) 4.0% − Kₑ 9.3%) × BV; BV grows 2.6%/yr
Graham NumberAsset$33.441.46xyes√(22.5 × EPS $1.14 × BVPS $43.60) — Graham's conservative floor
EV/EBITDA RelativeRelative$71.390.68xyesEBITDA $0.18B × sector EV/EBITDA 12.0x
FCF YieldEarnings$31.651.54xyesFCF $58.4M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$0.9650.92xyesEPS $1.14 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/BAsset$29.881.64xyesBV $43.60 × (ROIC 6.0% / WACC 8.7%)
P/Sales SectorRelative$169.550.29xyesRevenue $2.67B × sector P/S 2.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$12.323.97xyesEPS $1.14 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$111.9m
Net debt / NOPAT (after-tax)1.70x
Net debt / operating income (pre-tax)1.34x
Interest coverage8.1x
Burning cashno

Bullet Takeaways

Bull Case

Diesel engine manufacturing belongs to a category of industrial business that resists valuation from any single year's accounts. A fleet operator buys engines in a burst and then does not return for years, so reported profit is a position within a cycle rather than a run rate. AGCO, which sells into the same rhythm of capital equipment demand, describes the problem in its own filing: the unpredictable nature of many of these factors and the resulting volatility in demand make it difficult for us to accurately predict sales and optimize production, which in turn produces higher costs, including inventory carrying costs and underutilized manufacturing capacity. Any multiple placed on this kind of company is really a statement about where in that cycle the observer thinks they are standing.

Which is why the bull case here starts with the parts of the picture that do not move with the cycle. Book value stands at 43.60 a share against a price of 45.13. The balance sheet carries roughly 502 million dollars more in liquid assets than in borrowings, interest is covered about 8.1 times over, and the business is not consuming cash. Strip the surplus liquidity out of the market capitalisation and the operating enterprise is valued at something close to 6.4 times EBITDA, which is the multiple the forward cash-flow method carries flat into its terminal year rather than expanding. Cyclical manufacturers are frequently priced at mid-single-digit multiples of EBITDA. They are less frequently priced there while also sitting on that much unencumbered liquidity.

The more interesting feature is what today's price assumes about the future. Run the valuation backwards and the market is paying for company-wide operating profit to shrink by roughly 3% a year for the next five years. That is not a demanding assumption to beat. It is an assumption that the business gets smaller every year for half a decade, and a buyer at this level is compensated if the actual outcome is merely flat. Most equity arguments require the company to do something impressive. This one requires it to avoid a specific and sustained deterioration.

Management is not treating the powertrain transition as someone else's problem either. During May 2026 the company deployed flywheel range extension technology in Hong Kong and introduced an ammonia internal combustion engine for heavy-duty vehicles. Ammonia burns without carbon at the tailpipe and runs through machinery that resembles a diesel engine far more than it resembles a battery pack, which means the combustion engineering base has a path forward rather than only a terminal date. Whether that path pays is unresolved. That it is being built is a fact, and it is a more constructive answer to electrification than defending the existing product line would be.

Bear Case

The advantage being chipped away is not market position. It is conversion. On the last full year carried in the record, measured on the annual report basis rather than a rolling quarterly one, roughly 3.1% of revenue reached operating profit. For a manufacturer carrying heavy fixed assets and a large working-capital cycle, a margin that thin means the distance between an acceptable year and a loss-making one is a few points of input cost or a modest slip in volume. The moat, whatever it was, is no longer visible in what the business keeps.

The structural pressure behind that is the propulsion question. A specialist in internal combustion has spent decades accumulating an engineering advantage in an area that electrification does not merely compete with but bypasses. Commercial vehicle propulsion in the company's home market is shifting, and the direction of that shift is not favourable to a diesel specialist regardless of how well the diesels are made. The company's own recent work on alternative-fuel engines is the clearest acknowledgment available that the existing product line is not the answer for the next twenty years.

There is a subtler problem hidden inside the apparent cheapness. The stock changes hands at roughly its stated book value, which sounds like a floor. The valuation approaches that ask what that book actually earns land well beneath the current price, at roughly a third of it on the asset-based side, because assets are worth their carrying value only when the returns they generate approach what capital costs. Book value is not a floor for a business that earns too little on it. It is an accounting statement about what was paid for the machinery, and the market's willingness to pay near that figure is a decision, not an entitlement.

Compound the priced-in path and it stops sounding conservative. The price accepts operating profit shrinking about 3% a year for five consecutive years. That is the base case, not the bear case. The bear case is that the decline runs faster or lasts longer, and at this multiple there is no growth assumption embedded in the price to absorb the difference. That figure also shifts by several points for every point of assumed cost of capital, so hold the precise number loosely even as the direction stands.

One smaller thing sits oddly on the list of what the company does. Alongside three classes of engine and a broad other-products line, the revenue mix carries a hospitality operation. It rounds to nothing in the totals, which is precisely the point: it is not large enough to matter to earnings and it is not obviously connected to building engines. Small diversifications of that kind rarely damage a company. They do tell a shareholder something about how the capital is being considered.

Valuation

The gap between what the market pays for the shares and what it is paying for the business is the first thing to settle. The price of 45.13 sits barely above a stated book value of 43.60 a share. But the company holds roughly 502 million dollars more in liquid assets than in borrowings, and the enterprise the valuation methods actually assess is what remains once that surplus is set aside. On that basis the operating business changes hands at about 6.4 times EBITDA, the level the forward cash-flow method holds flat rather than expanding into its final year.

Inverted, the price embeds decline. It pays for company-wide operating profit to contract by roughly 3% annually across five years, computed at a 7.73% cost of capital. The arithmetic is unusually rate-sensitive, moving by more than six points of implied growth for each percentage point of cost of capital, so treat the figure as a description of direction rather than a measurement. The direction is unambiguous. The market is not asking this company to grow. It is assuming it will not.

The methods disagree in a way that repays a moment's attention, because two of them appear to contradict each other. Peer-multiple approaches land above the current price and the forward cash-flow approaches land near it, while the asset-based approaches land well below, at around a third of the price. That last result seems impossible for a stock trading at book until you look at how those methods are built: they do not credit the balance sheet with its carrying value, they credit it with the returns it earns, and they discount the shortfall between those returns and what an equity investor gives up elsewhere. Stated book says the assets cost this much. The excess-return methods say the assets currently earn less than that cost implies. Both statements are true at once, and the distance between them is the whole investment question.

What the balance sheet does is bound the downside rather than create value. Interest is covered roughly 8.1 times, the surplus liquidity is substantial relative to a market capitalisation near 1.8 billion, and the company is not burning cash. A business does not fail from this position; it stagnates from it. That is why the argument here is about the operating margin rather than about survival: at the current conversion rate, small absolute improvements in profitability move the equity a great deal, and small deteriorations do the same in reverse.

The cyclicality cuts through all of it. Engine demand arrives in waves tied to fleet replacement and freight activity, so any conclusion drawn from one year's profitability carries a wide error bar in both directions. The price currently sits on the pessimistic end of that band. What it does not carry is any assumption that the cycle turns.

Catalysts

Unaudited results for the first half of 2026 are scheduled for August 7, 2026, with the call announced on July 24, 2026. As a semi-annual reporter rather than a quarterly one, this company gives the market two substantial updates a year instead of four, which makes each release a larger information event than it would be elsewhere.

Capital return has already been settled for the prior year. On July 2, 2026 the company declared a US$0.87 per share cash dividend in respect of fiscal 2025, which went ex on July 17, 2026. A notice of annual general meeting followed on July 7, 2026. For a company whose share price sits close to its stated book value, the cash actually leaving the business and reaching holders is a more informative signal than most of what the income statement reports.

On the product side, May 2026 brought two developments pointed at the same question. The company deployed flywheel range extension technology in Hong Kong and introduced an ammonia internal combustion engine for heavy-duty vehicles. Neither will move revenue in the current half. Both bear on whether the combustion engineering base has commercial applications beyond diesel, which is the question that determines whether a mid-single-digit multiple on this business is a bargain or a correct assessment of a shrinking franchise.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

company announcement, July 24, 2026 · company announcement, July 2, 2026 · company product announcements, May 2026 · company announcement, July 7, 2026

View the full interactive CYD report on boothcheck