Churchill China PLC (LSE: CHH)

Churchill China PLC is an FTSE AIM All-Share index listed manufacturer of the finest ceramic tableware. The Company operates through 2 business divisions: Ceramics and Materials. This Report covers the Investment Highlights, Conclusion, and Recommendation on the stock.

Investment Rationale – Sell at GBX 1,410.00

• Profit Booking: CHH’s stock price has breached the R1 level suggested in the previous report published on 28 March 2023. Therefore, it is presenting a profit booking opportunity.
• Decline in Cash Generated from Operations: The Company’s cash generated from operations went down from £10.6 million during FY21 to £4.9 million during FY22 because of the substantial investment into inventory to optimise service levels and efficiency.
• Technical Indication: The 14-days RSI of ~81.88 illustrates that the stock price is trading in an overbought territory, indicating a correction in the stock price.
• Macroeconomic Uncertainties: CHH's performance is susceptible to inability to deliver expected acquisition synergies, economic recession, volatile equity markets, high levels of inflation, and rising interest rates.

Share Price Chart  

Conclusion

Based on the decline in Cash generated from operations during FY22, macroeconomic challenges, and price action stance, a "SELL" recommendation on Churchill China PLC has been given at the closing market price of GBX 1,410.00 (as of 14 April 2023).

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is 14 April 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 5: Dividend Yield may vary as per the stock price movement.

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