| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 27.52 | 364 |
| Intrinsic value (DCF) | 3.48 | -41 |
| Graham-Dodd Method | 4.19 | -29 |
| Graham Formula | 0.51 | -91 |
Changchai Company, Limited is a century-old Chinese industrial machinery manufacturer specializing in small and medium-sized diesel engines for agricultural and industrial applications. Founded in 1913 and headquartered in Changzhou, Changchai produces single-cylinder and multi-cylinder diesel engines under its established brand name for tractors, combine harvesters, light commercial vehicles, farm equipment, construction machinery, and power generation sets. As a key player in China's industrial machinery sector, the company has built a comprehensive product ecosystem that includes diesel engine fittings, castings, harvesting machinery, rotary cultivators, and walking tractors. Changchai serves the vital agricultural modernization and rural development markets within China while maintaining export operations. The company's long-standing presence in the diesel engine manufacturing industry positions it as a reliable supplier for China's agricultural and industrial equipment sectors, with additional business segments in investment consulting and real estate management. With over 110 years of operational history, Changchai leverages its manufacturing expertise and brand recognition to maintain relevance in China's evolving industrial landscape.
Changchai presents a mixed investment profile with several concerning financial metrics. The company operates with minimal debt (CNY 94.5 million versus CNY 1.06 billion cash) and a low beta of 0.627, suggesting defensive characteristics. However, the negative operating cash flow of CNY -154.3 million raises liquidity concerns, particularly when combined with thin net income margins of approximately 0.77% on CNY 2.42 billion revenue. The modest EPS of CNY 0.0262 and small dividend yield indicate limited shareholder returns. While the company's century-old brand and positioning in China's agricultural machinery sector provide some stability, the weak profitability metrics and cash flow challenges suggest significant operational headwinds. Investors should monitor the company's ability to improve operational efficiency and return to positive cash generation before considering a position.
Changchai operates in the highly competitive Chinese diesel engine market, where it faces pressure from both domestic giants and specialized manufacturers. The company's competitive positioning is defined by its focus on small and medium-sized engines for agricultural applications, a niche that provides some insulation from broader industrial engine competition but also limits growth potential. Changchai's primary competitive advantage lies in its established brand recognition dating back to 1913 and its deep integration within China's agricultural equipment supply chain. However, the company faces significant challenges from larger competitors with greater scale, technological resources, and distribution networks. The transition toward more efficient and environmentally compliant engines represents both a threat and opportunity—Changchai must invest in R&D to meet evolving emissions standards while competing against better-capitalized rivals. The company's diverse product portfolio including engine fittings, castings, and agricultural machinery provides some revenue diversification but may dilute focus from core engine manufacturing. Changchai's export operations offer growth potential but face intense international competition. The company's relatively small market capitalization of CNY 3.48 billion suggests it operates as a regional player rather than a national leader, requiring strategic focus on specific application segments where its historical expertise provides differentiation.