| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 31.33 | 336 |
| Intrinsic value (DCF) | 2.43 | -66 |
| Graham-Dodd Method | 1.48 | -79 |
| Graham Formula | 4.42 | -38 |
Guangxi Hechi Chemical Co., Ltd is a specialized chemical fertilizer producer with over 50 years of operational history, serving China's vital agricultural sector. Founded in 1969 and headquartered in Hechi, Guangxi, the company operates in the Basic Materials sector with a focus on Agricultural Inputs. Hechi Chemical's product portfolio includes essential fertilizers such as urea, compound fertilizers, and methanol, along with industrial chemicals like liquid carbon dioxide, ammonia, and sulfur. The company leverages its long-standing presence in China's agricultural heartland to serve regional farming communities with critical crop nutrients. As China continues to prioritize food security and agricultural modernization, Hechi Chemical plays a strategic role in the domestic fertilizer supply chain. The company's diversified chemical output positions it to benefit from both agricultural demand and industrial chemical markets. With its established manufacturing base and regional market presence, Hechi Chemical represents a specialized player in China's chemical industry, contributing to the nation's agricultural productivity while maintaining industrial chemical capabilities.
Guangxi Hechi Chemical presents a mixed investment profile with notable strengths and concerning weaknesses. The company demonstrates solid profitability with CNY 79.3 million net income on CNY 211.5 million revenue, representing a healthy 37.5% net margin. However, significant red flags include negative operating cash flow of CNY -28 million despite positive earnings, suggesting potential working capital issues or accounting timing differences. The company maintains a reasonable debt level with CNY 123.4 million total debt against CNY 89.2 million cash, though the negative cash flow raises liquidity concerns. With no dividend distribution and a beta of 0.121 indicating low volatility relative to the market, the stock may appeal to investors seeking exposure to China's agricultural inputs sector but requires careful monitoring of cash flow sustainability and working capital management.
Guangxi Hechi Chemical operates in a highly competitive Chinese fertilizer market dominated by large state-owned enterprises and regional players. The company's competitive positioning is primarily regional, serving the Guangxi province agricultural market rather than competing nationally. Hechi's advantage lies in its long-established presence (founded 1969) and localized distribution networks, which provide stable customer relationships in its operating region. However, the company faces significant scale disadvantages compared to national fertilizer producers who benefit from economies of scale, broader distribution, and stronger R&D capabilities. The negative operating cash flow indicates potential competitive pressures on working capital terms or inventory management challenges. In the commodity fertilizer business, Hechi's smaller scale limits its ability to compete on price with larger producers, forcing a focus on regional service differentiation. The company's product diversification into industrial chemicals like methanol provides some buffer against agricultural seasonality but exposes it to different competitive dynamics in chemical markets. Overall, Hechi Chemical occupies a niche position in China's fertilizer landscape, reliant on regional advantages rather than scale or technological leadership for its competitive edge.