Intrinsic Value Dalian Demaishi Precision Technology Co., Ltd. (301007.SZ)

• Previous Close: $37.80
• Intrinsic Value: $11.77
• Upside potential: -69%

Stock Valuation Context

Business Model And Market Position

Dalian Demaishi Precision Technology operates as a specialized manufacturer of micro-precision shafts and precision cutting components, serving primarily the automotive and industrial motor sectors. The company's core revenue model centers on producing highly engineered mechanical parts including various automobile shafts, motor shafts, and precision cutting elements for automotive subsystems. Its comprehensive product portfolio encompasses critical components for automotive applications such as braking systems, power steering, oil pumps, wiper mechanisms, and throttle assemblies, positioning the firm within the automotive supply chain's precision manufacturing segment. Operating from its Dalian manufacturing base established in 2001, the company has developed specialized expertise in manufacturing precision shafts for diverse automotive applications including CS-ROM, EPS steering, window motors, and armature systems. The business maintains both domestic Chinese market presence and export operations, catering to automotive OEMs and component suppliers requiring high-precision mechanical solutions. Within China's competitive industrial landscape, Demaishi occupies a niche position focusing on precision metal fabrication for automotive applications, differentiating through technical manufacturing capabilities in micro-precision components rather than competing in mass-produced standard parts.

Revenue Profitability And Efficiency

For FY 2024, Dalian Demaishi reported revenue of CNY 690.4 million with net income of CNY 53.98 million, translating to a net margin of approximately 7.8%. The company demonstrated solid cash generation with operating cash flow of CNY 113.16 million, significantly exceeding net income and indicating healthy earnings quality. Capital expenditures of CNY 47.48 million suggest ongoing investment in production capabilities while maintaining positive free cash flow generation.

Earnings Power And Capital Efficiency

The company delivered diluted EPS of CNY 0.35 for the fiscal year, reflecting its earnings capacity relative to the current share base. Operating cash flow substantially exceeded net income by approximately 110%, indicating strong cash conversion efficiency. The business maintained disciplined capital allocation with capex representing about 42% of operating cash flow, supporting sustainable growth without excessive capital intensity.

Balance Sheet And Financial Health

Dalian Demaishi maintains a conservative financial structure with cash and equivalents of CNY 174.92 million against total debt of CNY 122.77 million, resulting in a net cash position. This liquidity profile provides operational flexibility and financial stability. The company's balance sheet strength is further evidenced by its ability to maintain positive working capital and fund operations internally without significant leverage.

Growth Trends And Dividend Policy

The company demonstrated a shareholder-friendly approach through a dividend per share of CNY 0.23, representing a payout ratio of approximately 66% based on diluted EPS. This dividend policy indicates management's confidence in sustainable earnings and commitment to returning capital to shareholders while maintaining sufficient retained earnings for business reinvestment and growth initiatives.

Valuation And Market Expectations

With a market capitalization of approximately CNY 7.0 billion, the company trades at a significant premium to book value, reflecting market expectations for future growth in the precision automotive components sector. The beta of 1.62 indicates higher volatility than the broader market, typical for specialized industrial companies with concentrated automotive exposure and sensitivity to economic cycles.

Strategic Advantages And Outlook

Dalian Demaishi's strategic position hinges on its specialized expertise in precision shaft manufacturing for automotive applications, a segment requiring technical manufacturing capabilities. The company's export activities provide diversification beyond domestic Chinese markets. Future performance will likely correlate with automotive production trends and the ongoing electrification of vehicle systems, which may create both opportunities and challenges for traditional precision component suppliers.

Sources

Company DescriptionFinancial Metrics Database