Stock Analysis & Valuation Shenzhen Sunrise New Energy Co., Ltd. (002256.SZ)

• Previous Close: $3.59
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	27.06	654
Intrinsic value (DCF)	0.92	-74
Graham-Dodd Method		n/a
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Shenzhen Sunrise New Energy Co., Ltd. is a prominent Chinese specialty chemicals manufacturer with a nearly three-decade legacy since its 1995 founding. Headquartered in Shenzhen, the company specializes in the research, development, and marketing of fine chemical products across three core segments: environmental protection coatings, green household products, and automotive care solutions. Operating under established brands including 7CF, RAINBOW, Blue Bridge, and Doc. Kang, Sunrise New Energy serves diverse markets throughout China, Asia, Europe, and the United States. The company's product portfolio encompasses spray paints, lubricants, motor engine care products, car waxes, cleaners, wall paints, and comprehensive care solutions for automotive, household, and industrial applications. Additionally, Sunrise New Energy provides OEM and ODM services, leveraging its manufacturing expertise for third-party clients. As part of China's basic materials sector, the company plays a vital role in the evolving green chemicals industry, focusing on environmentally friendly formulations that align with global sustainability trends. Despite recent financial challenges, Sunrise New Energy maintains a significant market presence with a market capitalization exceeding 6.4 billion CNY and continues to innovate in the competitive specialty chemicals landscape.

Investment Summary

Shenzhen Sunrise New Energy presents a high-risk investment proposition characterized by significant financial distress but potential turnaround opportunity. The company reported a substantial net loss of -143.4 million CNY on revenue of 346.3 million CNY for the period, with negative EPS of -0.07 and minimal operating cash flow of 901,254 CNY. While the company maintains a reasonable cash position of 45.3 million CNY against total debt of 30.8 million CNY, its negative profitability and high beta of 1.323 indicate substantial volatility and sensitivity to market movements. The absence of dividend payments reflects the company's focus on preserving capital. Investment attractiveness hinges on the company's ability to execute a successful operational turnaround, leverage its established brand portfolio, and capitalize on growing demand for environmental protection products in China and international markets. The risk-reward profile suggests this is suitable only for investors with high risk tolerance and conviction in management's ability to restore profitability.

Competitive Analysis

Shenzhen Sunrise New Energy operates in the highly fragmented and competitive specialty chemicals market, where it faces pressure from both domestic Chinese manufacturers and international chemical giants. The company's competitive positioning is challenged by its current financial performance, which limits its ability to invest in research and development and marketing compared to better-capitalized competitors. Sunrise New Energy's primary competitive advantages include its established brand portfolio (7CF, RAINBOW, Blue Bridge, Doc. Kang) that has built consumer recognition over nearly 30 years, and its diversified product range spanning automotive care, household products, and industrial applications. The company's focus on environmental protection products aligns with growing regulatory and consumer preferences for green chemicals, potentially providing a differentiation edge. However, its scale is relatively modest compared to industry leaders, constraining economies of scale in procurement and production. The OEM/ODM services business provides additional revenue streams but typically carries lower margins than branded products. Geographic diversification across China, Asia, Europe, and the United States helps mitigate regional economic risks but also exposes the company to international competition and trade dynamics. The competitive landscape requires continuous innovation and marketing investment to maintain relevance, areas where Sunrise New Energy's financial constraints may create disadvantages against larger, more profitable competitors.

Major Competitors

• Wanhua Chemical Group Co., Ltd. (600309.SS): Wanhua Chemical is China's largest MDI producer and a global chemical giant with significantly greater scale and financial resources than Sunrise New Energy. Its strengths include massive production capacity, strong R&D capabilities, and vertical integration. However, Wanhua focuses primarily on bulk chemicals rather than consumer-facing specialty products, creating different market positioning. Compared to Sunrise, Wanhua has substantially stronger profitability and international presence but less focus on branded consumer chemical products.
• Luxi Chemical Group Co., Ltd. (000830.SZ): Luxi Chemical is a major Chinese chemical producer with diverse product lines including fertilizers and fine chemicals. The company benefits from larger scale and more stable financial performance than Sunrise New Energy. Luxi's strengths include established distribution networks and manufacturing expertise, though it has less focus on consumer-branded products like automotive care. Compared to Sunrise, Luxi operates with better profitability but may lack the specialized brand recognition in consumer chemical segments.
• Satellite Chemical Co., Ltd. (002648.SZ): Satellite Chemical specializes in petrochemicals and fine chemicals with strong positions in acrylic acid and esters. The company demonstrates robust financial performance and significant scale advantages over Sunrise New Energy. Satellite's strengths include integrated production facilities and technological capabilities, though its focus is more on industrial chemicals than consumer products. Compared to Sunrise, Satellite has superior financial metrics but less developed consumer brands in the automotive and household care segments.
• Procter & Gamble Company (PG): As a global consumer goods giant, P&G represents competition in household care segments with massive scale, powerful brands, and extensive distribution networks. Its strengths include unparalleled marketing resources and global reach, though it has less focus on automotive care chemicals specifically. Compared to Sunrise New Energy, P&G operates on a completely different scale with dominant market positions but may lack the specialized focus on automotive chemical products that Sunrise offers.
• Church & Dwight Co., Inc. (CHD): Church & Dwight competes in household and personal care segments with strong brands like Arm & Hammer. The company demonstrates consistent profitability and brand strength, though its automotive care presence is limited compared to its household products focus. Compared to Sunrise, Church & Dwight has superior financial performance and brand recognition but less specialized expertise in automotive chemical formulations and environmental protection coatings.