Intrinsic Value Jiangsu Feymer Technology Co., Ltd. (688350.SS)

• Previous Close: $27.42
• Intrinsic Value: $7.34
• Upside potential: -73%

Stock Valuation Context

Business Model And Market Position

Jiangsu Feymer Technology operates as a specialized chemical producer focused on hydrophilic functional polymers and water treatment solutions within China's industrial sector. The company generates revenue through manufacturing and selling functional monomers and specialized chemicals for diverse industrial applications including water and sludge treatment, membrane technology, pulp and paper processing, mineral washing, textile printing, and oil and gas production. Feymer Technology occupies a niche position in the basic materials sector, serving critical industrial processes that require advanced water treatment and functional polymer solutions. The company's product portfolio addresses essential needs in environmental management and industrial efficiency, positioning it within the growing water treatment chemicals market. Founded in 2010 and based in Zhangjiagang, the company has developed specialized expertise in polymer chemistry and water treatment technologies, catering to industrial clients across multiple sectors that require customized chemical solutions for process optimization and environmental compliance.

Revenue Profitability And Efficiency

The company reported revenue of CNY 1.57 billion for the period but experienced a net loss of CNY 4.65 million, indicating margin pressure despite substantial top-line performance. Operating cash flow remained positive at CNY 117 million, suggesting core operations continue to generate cash despite profitability challenges. The negative EPS of -0.0381 reflects the net loss position and operational inefficiencies requiring management attention.

Earnings Power And Capital Efficiency

Feymer Technology demonstrated significant capital investment with capital expenditures of CNY -325 million, indicating substantial reinvestment in production capacity and technological capabilities. The negative net income contrasts with the substantial revenue base, suggesting either pricing pressures, cost inflation, or strategic investments affecting near-term profitability. The company's capital allocation appears focused on long-term capacity expansion rather than immediate earnings generation.

Balance Sheet And Financial Health

The balance sheet shows CNY 473 million in cash and equivalents against total debt of CNY 674 million, indicating moderate leverage. The debt position appears manageable given the cash reserves and operating cash flow generation. The company maintains adequate liquidity for ongoing operations while supporting its capital investment program through a combination of internal cash generation and debt financing.

Growth Trends And Dividend Policy

Despite the net loss position, the company maintained a dividend payment of CNY 0.25 per share, suggesting management's confidence in long-term recovery and commitment to shareholder returns. The substantial capital expenditures indicate aggressive growth investment, potentially positioning the company for future market share expansion and technological advancement in the specialized chemicals sector.

Valuation And Market Expectations

With a market capitalization of CNY 2.83 billion, the company trades at approximately 1.8 times revenue, reflecting market expectations for recovery and growth despite current profitability challenges. The beta of 0.592 indicates lower volatility than the broader market, suggesting investors view the company as relatively stable within its specialized industrial niche.

Strategic Advantages And Outlook

The company's specialized focus on hydrophilic functional polymers provides technological differentiation in water treatment and industrial processes. Its diverse application across multiple industries offers revenue diversification, though current profitability challenges require operational improvements. The strategic investments in capacity expansion position the company to capitalize on growing demand for advanced water treatment solutions in China's industrial sector.

Sources

Company financial statementsStock exchange disclosuresMarket data providers