| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 26.02 | 61 |
| Intrinsic value (DCF) | 1.95 | -88 |
| Graham-Dodd Method | 1.28 | -92 |
| Graham Formula | 1.24 | -92 |
Sichuan Xinjinlu Group Co., Ltd. is a prominent Chinese chemical manufacturer specializing in chlor-alkali products and industrial plastic materials. Headquartered in Deyang, Sichuan Province, the company operates at the core of China's basic materials sector, producing essential chemicals including polyvinyl chloride (PVC) resin, caustic soda, industrial synthetic hydrochloric acid, liquid chlorine, potassium hydroxide, and calcium carbide. Serving industrial markets across China, Xinjinlu's product portfolio is critical for construction, manufacturing, and various downstream industrial applications. The company has evolved from its former identity as Sichuan Jinlu Group Co., Ltd., maintaining its strategic position in China's chemical industry landscape. With operations spanning chemical production, specialized PVC resins, and additional services like warehousing, Sichuan Xinjinlu plays a vital role in the regional industrial supply chain. The company's focus on chlor-alkali chemicals positions it within a cyclical industry heavily influenced by construction activity, industrial demand, and raw material costs, particularly energy prices affecting calcium carbide production.
Sichuan Xinjinlu presents a high-risk investment profile characterized by financial distress signals including negative net income of -CNY 62.5 million, negative EPS of -CNY 0.10, and concerning negative operating cash flow of -CNY 105.7 million. While the company maintains moderate debt levels relative to its market capitalization, the combination of operational losses and cash burn raises significant sustainability concerns. The zero dividend policy reflects capital preservation priorities amid challenging market conditions. Investors should note the company's sensitivity to Chinese industrial cycles and construction sector performance, with its beta of 0.626 suggesting moderate volatility relative to the broader market. The chemical sector's exposure to energy costs and environmental regulations adds additional risk layers that require careful monitoring for potential turnaround opportunities.
Sichuan Xinjinlu operates in China's highly competitive chlor-alkali chemical market, where scale, cost efficiency, and geographic positioning determine competitive advantage. The company's regional focus in Sichuan provides some insulation from national competitors but limits market diversification. Xinjinlu's competitive positioning is challenged by its current financial performance, which may hinder investment in production efficiency and technological upgrades compared to better-capitalized rivals. The company's product mix centered on PVC resin and caustic soda faces intense price competition from larger integrated chemical producers with superior economies of scale. While serving regional industrial markets offers logistical advantages, this specialization also creates dependency on local economic conditions. The negative operating cash flow indicates potential operational inefficiencies or working capital management issues that undermine competitiveness. In the chlor-alkali sector, where energy costs significantly impact profitability, Xinjinlu's ability to manage production expenses relative to competitors will be crucial for recovery. The company's competitive advantage appears limited to regional market knowledge and established customer relationships, rather than technological or cost leadership positions enjoyed by industry leaders.