Stock Analysis & Valuation Chongqing Changjiang River Moulding Material (Group) Co., Ltd. (001296.SZ)

• Previous Close: $29.29
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	26.25	-10
Intrinsic value (DCF)	7.12	-76
Graham-Dodd Method	10.78	-63
Graham Formula	9.53	-67

Strategic Investment Analysis

Company Overview

Chongqing Changjiang River Moulding Material (Group) Co., Ltd. is a specialized industrial materials manufacturer headquartered in Chongqing, China, with a legacy dating back to 1993. The company operates in the metal fabrication sector, focusing on the production and global distribution of resin coated sand, foundry auxiliary materials, sand cores, and proppants. These essential materials serve critical roles in metal casting processes across diverse industries including automotive, motorcycle manufacturing, aviation, railroad, and oil and gas. The company has developed a comprehensive business model that includes the innovative reclamation of used foundry sand, demonstrating environmental responsibility while creating cost efficiencies. Operating on the Shenzhen Stock Exchange, Chongqing Changjiang River Moulding Material has established itself as a key supplier in China's massive industrial supply chain, leveraging its strategic location in Chongqing—a major industrial hub. The company's product portfolio addresses fundamental needs in metal casting and energy extraction, positioning it as an integral component of global manufacturing and energy infrastructure development.

Investment Summary

Chongqing Changjiang River Moulding Material presents a mixed investment profile with several notable strengths and concerns. The company demonstrates solid profitability with net income of CNY 121.2 million on revenue of CNY 1.05 billion, translating to a healthy net margin of approximately 11.6%. The diluted EPS of 0.81 and dividend per share of 0.4 indicate shareholder-friendly policies. Financially, the company maintains reasonable leverage with total debt of CNY 99.2 million against cash reserves of CNY 173.2 million, suggesting adequate liquidity. However, the modest market capitalization of CNY 3.41 billion and low beta of 0.423 may indicate limited market interest or trading liquidity. The capital expenditures of CNY -111.5 million relative to operating cash flow of CNY 178.3 million shows disciplined investment, but revenue scale remains modest for a public industrial company. The company's exposure to cyclical industries like automotive and oil/gas represents both opportunity and risk depending on macroeconomic conditions.

Competitive Analysis

Chongqing Changjiang River Moulding Material competes in the specialized niche of foundry materials and proppants, where technical expertise and customer relationships are critical competitive factors. The company's competitive positioning is strengthened by its integrated business model that includes both production and reclamation services, creating a circular economy approach that may provide cost advantages and environmental benefits. Its location in Chongqing, a major industrial center in Western China, provides logistical advantages for serving domestic manufacturing clients in the automotive and machinery sectors. The company's diverse customer base across multiple industries (auto, aviation, railroad, oil/gas) provides some revenue diversification, though all these sectors are economically sensitive. However, the company faces significant competitive challenges from larger, more diversified industrial materials suppliers that may have greater R&D capabilities, broader geographic reach, and stronger financial resources. The foundry materials market is highly fragmented with numerous regional players, and Chongqing Changjiang River must compete on both technical specifications and price. Its proppant business faces competition from specialized energy services companies with deeper expertise in oil and gas applications. The company's moderate scale (CNY 1.05 billion revenue) may limit its ability to compete on cost with larger producers or to make substantial investments in product innovation. Its competitive advantage appears to lie in regional focus, specialized expertise, and the integrated reclamation service rather than in scale or technological leadership.

Major Competitors

• Hoshine Silicon Industry Co., Ltd. (603260.SS): Hoshine Silicon is a major Chinese producer of industrial silicon and silicon-based materials, competing in some overlapping industrial applications. As one of the world's largest silicon metal producers, Hoshine benefits from significant economies of scale and vertical integration. However, the company is much larger and more diversified than Chongqing Changjiang River, with broader exposure to solar, electronics, and chemical industries. Hoshine's scale provides cost advantages but may limit its focus on specialized foundry materials where Chongqing Changjiang River has deeper expertise.
• Anhui Conch Cement Company Limited (600585.SS): While primarily a cement producer, Anhui Conch has interests in industrial minerals and materials that may overlap with certain foundry applications. The company's massive scale and strong distribution network across China provide competitive advantages in serving industrial customers. However, Anhui Conch's focus remains predominantly on construction materials rather than specialized foundry products, limiting direct competition in Chongqing Changjiang River's core markets. The company's financial strength far exceeds that of Chongqing Changjiang River.
• Huntsman Corporation (HUN): Huntsman is a global chemical company producing advanced materials including polyurethane and epoxy systems used in foundry applications. The company competes in resin-coated sand and other foundry materials with superior technological capabilities and global reach. Huntsman's R&D resources and international presence give it advantages in serving multinational clients, but it may lack the localized focus and cost structure that benefit Chongqing Changjiang River in the Chinese market. The company's broader product portfolio provides diversification benefits.
• Eastman Chemical Company (EMN): Eastman produces specialty chemicals and materials that compete in some industrial applications overlapping with foundry materials. The company's strong technological capabilities and global distribution network provide competitive advantages, particularly for advanced materials requiring sophisticated formulations. However, Eastman's focus on higher-value specialty chemicals may limit its attention to commodity-type foundry materials where Chongqing Changjiang River competes. The company's international presence contrasts with Chongqing Changjiang River's primarily domestic focus.
• Beijing Originwater Technology Co., Ltd. (002271.SZ): While primarily a water treatment company, Originwater has interests in environmental services including industrial waste reclamation that may overlap with Chongqing Changjiang River's foundry sand reclamation business. The company's strong environmental technology capabilities and government relationships provide advantages in waste management services. However, Originwater lacks Chongqing Changjiang River's specialized expertise in foundry materials production and direct relationships with manufacturing clients. The companies compete more in complementary services than core products.