Intrinsic Value Shenzhen Longli Technology Co.,Ltd (300752.SZ)

• Previous Close: $18.19
• Intrinsic Value: $9.33
• Upside potential: -49%

Stock Valuation Context

Business Model And Market Position

Shenzhen Longli Technology Co., Ltd. operates as a specialized manufacturer within the technology hardware sector, focusing on the research, development, production, and sale of LED backlight display modules. The company's core revenue model is derived from selling these critical components to manufacturers across diverse end-markets, including communication devices, computers, industrial control systems, automotive displays, and medical equipment. This positions Longli Technology as a key supplier in the electronics value chain, serving the essential need for high-quality backlighting in various LCD panels. The company's strategic focus on a specialized niche allows it to develop deep technical expertise and maintain long-term relationships with industrial clients who require reliable, custom-tailored display solutions. Operating from its base in Shenzhen, a major global electronics manufacturing hub, the company benefits from proximity to a dense supply chain and a large pool of technical talent. Its market position is that of a specialized component supplier rather than a consumer-facing brand, competing on technological capability, product quality, and cost efficiency in a highly competitive segment of the display industry.

Revenue Profitability And Efficiency

For the fiscal year, the company reported revenue of CNY 1.32 billion, achieving a net income of CNY 106.4 million. This translates to a net profit margin of approximately 8.1%, indicating moderate profitability. The company generated robust operating cash flow of CNY 347.7 million, which significantly exceeded its net income, suggesting healthy cash conversion from its operations. Capital expenditures of CNY 131.9 million were directed towards maintaining and expanding production capabilities.

Earnings Power And Capital Efficiency

The company's diluted earnings per share stood at CNY 0.47, reflecting its earnings power on a per-share basis. The strong operating cash flow, which was more than three times the net income, underscores efficient working capital management and high-quality earnings. The difference between operating cash flow and capital expenditures indicates the company's ability to generate free cash flow to fund future growth or strengthen its balance sheet.

Balance Sheet And Financial Health

Longli Technology maintains a conservative financial structure, evidenced by a cash and equivalents balance of CNY 428.4 million against minimal total debt of just CNY 3.7 million. This results in a substantial net cash position, providing significant financial flexibility and a very low risk of financial distress. The strong liquidity position supports ongoing operations and potential strategic investments without reliance on external financing.

Growth Trends And Dividend Policy

The company did not pay a dividend for the period, opting to retain all earnings to fund its business operations and future growth initiatives. The capital expenditure level indicates ongoing investment in its production infrastructure. The growth strategy appears focused on reinvesting profits to enhance technological capabilities and expand market share within its specialized LED backlight module segment.

Valuation And Market Expectations

With a market capitalization of approximately CNY 5.50 billion, the market values the company at a price-to-earnings multiple derived from its current earnings. The exceptionally low beta of 0.125 suggests the stock has exhibited very low volatility relative to the broader market, which may reflect its niche market position and stable, but perhaps slower-growth, business profile as perceived by investors.

Strategic Advantages And Outlook

The company's primary strategic advantages include its specialized technical expertise in LED backlighting, a strong balance sheet providing operational stability, and its location within China's primary electronics manufacturing ecosystem. The outlook is tied to demand trends across its diverse end-markets, particularly industrial automation, automotive displays, and medical equipment. Future performance will depend on its ability to innovate and maintain cost competitiveness against other component suppliers.

Sources

Company Financial ReportsShenzhen Stock Exchange