| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 34.94 | 79 |
| Intrinsic value (DCF) | 150.71 | 673 |
| Graham-Dodd Method | 1.28 | -93 |
| Graham Formula | 54.64 | 180 |
North Copper (Shanxi) Co., Ltd. is a prominent Chinese chemical manufacturer specializing in inorganic chemical products with diverse industrial applications. Formerly known as Nafine Chemical Industry Group Co., Ltd., the company has established itself as a key player in China's basic materials sector since its founding in 1996. Headquartered in Yuncheng, China, North Copper produces a comprehensive portfolio of chemical products including yuanming powder for detergents and textiles, barium sulfate for coatings and plastics, alkali sulfide for metallurgy and pharmaceuticals, and sulfonated products for liquid detergents. The company's products serve multiple industries including manufacturing, construction, pharmaceuticals, and consumer goods, with export operations spanning approximately 30 countries globally. Operating within the copper sector classification, North Copper leverages China's industrial infrastructure and chemical manufacturing expertise to maintain its market position. The company's strategic location in Shanxi province provides access to key industrial regions and raw material sources, supporting its production capabilities across various chemical segments. With a market capitalization exceeding CNY 26.5 billion, North Copper represents a significant entity in China's chemical manufacturing landscape, combining traditional chemical production with modern industrial applications.
North Copper presents a mixed investment profile with several concerning financial metrics. The company generated substantial revenue of CNY 24.1 billion but achieved relatively modest net income of CNY 612.8 million, indicating thin profit margins. More alarmingly, the company exhibits significant financial strain with total debt of CNY 7.14 billion substantially exceeding cash reserves of CNY 888.8 million, creating liquidity concerns. The negative capital expenditures of -CNY 1 billion suggest potential divestment or reduced investment in future growth. While the company pays a dividend of CNY 0.11 per share, the high beta of 1.256 indicates above-market volatility, potentially reflecting sensitivity to economic cycles affecting the chemical industry. Investors should carefully consider the company's debt load and margin pressures against its established market position and export capabilities.
North Copper operates in a highly competitive inorganic chemicals market where scale, product diversification, and cost efficiency determine competitive positioning. The company's competitive advantage lies in its diversified product portfolio serving multiple industrial sectors, which provides some revenue stability compared to single-product competitors. Its export reach to approximately 30 countries demonstrates international competitiveness, particularly in specialized chemical segments like barium sulfate and alkali sulfide. However, the company faces significant challenges in maintaining competitive margins amid rising raw material costs and intense domestic competition. The chemical manufacturing sector in China is characterized by fragmentation and price competition, putting pressure on profitability. North Copper's debt-heavy balance sheet (CNY 7.14 billion debt versus CNY 888.8 million cash) limits its ability to invest in technological upgrades or expansion compared to better-capitalized competitors. The company's competitive positioning is further complicated by environmental regulations affecting chemical production in China, requiring ongoing compliance investments. While its established customer relationships and product quality provide some defensive moat, North Copper's competitive advantage appears constrained by financial limitations and industry-wide margin pressures. The company must balance debt management with necessary operational investments to maintain its market position against larger, more financially stable competitors.