Intrinsic Value Nantong Jiangshan Agrochemical & Chemicals Co.,Ltd. (600389.SS)

• Previous Close: $27.42
• Intrinsic Value: $8.92
• Upside potential: -67%

Stock Valuation Context

Business Model And Market Position

Nantong Jiangshan Agrochemical & Chemicals operates as a diversified chemical manufacturer specializing in agricultural solutions and industrial chemicals. The company generates revenue through the production and distribution of herbicides, insecticides, and fungicides, serving China's extensive agricultural sector while also manufacturing resins, chlorine-caustic sodium, and fine chemicals for industrial applications. Its product portfolio includes glyphosate-based herbicides and specialized insecticides like dichlorvos and imidaclothiz, positioning it within the competitive agrochemical landscape. The company maintains international reach by exporting to 40 countries across Asia, Europe, the Americas, and Africa, demonstrating global market penetration beyond its domestic base. This export capability provides revenue diversification while leveraging China's manufacturing advantages. The company further expands its market position through production of intermediate chemicals and advanced materials including microporous insulating boards and flame retardant products, creating multiple revenue streams across different chemical sub-sectors.

Revenue Profitability And Efficiency

The company reported revenue of CNY 5.43 billion with net income of CNY 224.4 million, indicating a net margin of approximately 4.1%. Operating cash flow of CNY 347.2 million demonstrates reasonable cash generation from core operations. The capital expenditure of CNY -1.26 billion suggests significant investment in capacity expansion or modernization projects during the period.

Earnings Power And Capital Efficiency

Diluted EPS of CNY 0.52 reflects the company's earnings capacity relative to its equity base. The substantial capital expenditure program indicates management's focus on long-term growth investments, though this has temporarily impacted free cash flow generation. The company maintains operational cash flow sufficient to support its strategic investments while funding ongoing operations.

Balance Sheet And Financial Health

The balance sheet shows CNY 1.13 billion in cash against total debt of CNY 1.51 billion, indicating moderate leverage. The cash position provides liquidity for operational needs and debt servicing. The debt level appears manageable given the company's cash generation capacity and market position in the chemical sector.

Growth Trends And Dividend Policy

The company paid a dividend of CNY 0.10 per share, representing a payout ratio of approximately 19% based on diluted EPS. This balanced approach returns capital to shareholders while retaining earnings for reinvestment. The significant capital expenditure suggests management is prioritizing growth initiatives alongside shareholder returns.

Valuation And Market Expectations

With a market capitalization of CNY 11.0 billion and a beta of 0.72, the market prices the company with lower volatility than the broader market. The valuation reflects expectations for stable performance in the agricultural chemical sector, though specific growth assumptions are not explicitly detailed in available data.

Strategic Advantages And Outlook

The company benefits from its diversified chemical portfolio and international export capabilities, providing resilience against regional market fluctuations. Its position in agricultural chemicals aligns with food security needs, while industrial chemical products offer additional growth avenues. The ongoing capital investments suggest confidence in future demand across its product segments.

Sources

Company financial reportsStock exchange disclosuresMarket data providers