| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 30.13 | -42 |
| Intrinsic value (DCF) | 13.89 | -73 |
| Graham-Dodd Method | 9.88 | -81 |
| Graham Formula | 8.07 | -84 |
Anhui Tuoshan Heavy Industry Co., Ltd. is a specialized Chinese manufacturer of critical components for construction and agricultural machinery, established in 1989 and headquartered in Xuancheng. Operating within the industrials sector, the company focuses on the research, design, production, and sale of high-precision forging parts, including track and pin series, bucket teeth, gear seats, and various transmission components. As a key supplier to the heavy equipment industry, Tuoshan Heavy Industry plays a vital role in the manufacturing supply chain, providing essential aftermarket and OEM parts that ensure the operational efficiency and longevity of machinery. The company's strategic positioning in China's robust industrial landscape allows it to serve both domestic and international markets, capitalizing on the continuous demand for infrastructure development and agricultural modernization. With decades of expertise in forging technology, Anhui Tuoshan represents a fundamental component supplier in the global heavy machinery ecosystem, contributing to equipment reliability and performance across construction, mining, and agricultural applications.
Anhui Tuoshan Heavy Industry presents a mixed investment profile characterized by modest profitability but concerning cash flow dynamics. The company generated CNY 601 million in revenue with a net income of CNY 20.3 million, resulting in thin margins. Most notably, the company reported negative operating cash flow of CNY -132 million and significant capital expenditures of CNY -111 million, indicating potential liquidity strain despite a cash position of CNY 71 million against total debt of CNY 233 million. The dividend payout of CNY 0.4 per share appears aggressive relative to earnings per share of CNY 0.27, suggesting the dividend may not be fully sustainable from current earnings. The extremely low beta of 0.013 suggests minimal correlation with broader market movements, potentially offering defensive characteristics but also limited growth participation. Investors should carefully assess the company's ability to improve cash generation and manage its capital structure.
Anhui Tuoshan Heavy Industry competes in the highly fragmented and competitive construction machinery components market, where scale, technological capability, and customer relationships determine success. The company's competitive positioning appears challenged by its relatively small market capitalization of approximately CNY 3 billion and modest revenue base compared to larger industrial component manufacturers. Tuoshan's specialization in forging technology for track systems, bucket teeth, and transmission parts represents a focused niche, but the company likely faces intense price competition from both domestic Chinese manufacturers and international suppliers. The negative operating cash flow suggests potential operational inefficiencies or working capital challenges that could impair its competitive standing against better-capitalized rivals. While the company's long-established presence since 1989 provides some customer relationship advantages and manufacturing experience, the capital-intensive nature of the forging industry requires continuous investment in equipment and technology to maintain competitiveness. The company's ability to serve both OEM and aftermarket segments provides some diversification, but its smaller scale may limit its bargaining power with raw material suppliers and large equipment manufacturers. Geographic concentration in China exposes the company to domestic economic cycles and infrastructure investment patterns, though this also positions it to benefit from government stimulus programs targeting construction and agricultural sectors.