| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 21.13 | 19 |
| Intrinsic value (DCF) | 14.48 | -19 |
| Graham-Dodd Method | 9.48 | -47 |
| Graham Formula | 0.44 | -98 |
Lier Chemical Co., Ltd. is a leading Chinese agrochemical manufacturer specializing in the research, development, production, and sale of low-toxicity, low-residue pesticides and chemical intermediates. Founded in 1993 and headquartered in Mianyang, China, the company has established itself as a key player in the global agricultural chemicals sector. Lier Chemical's diverse product portfolio includes herbicides (pinoxaden, glufosinate-ammonium), fungicides (azoxystrobin, difenoconazole), and insecticides (chlorpyrifos), along with sophisticated chemical intermediates like chloropyridines and organophosphates. The company operates both domestically and internationally, serving agricultural markets with environmentally safer pesticide solutions. As global food security concerns drive demand for efficient crop protection, Lier Chemical leverages its technical expertise in pyridine chemistry to develop advanced formulations that meet evolving regulatory standards. The company's vertical integration in intermediate production provides cost advantages and supply chain stability in the competitive basic materials sector. With China's position as a global agrochemical manufacturing hub, Lier Chemical represents a strategic investment opportunity in agricultural technology and specialty chemicals.
Lier Chemical presents a mixed investment profile with several concerning financial metrics despite its market position. The company generated CNY 7.31 billion in revenue with net income of CNY 215 million, resulting in a thin net margin of approximately 2.9%. More alarmingly, the company reported negative free cash flow due to substantial capital expenditures of CNY -1.18 billion exceeding operating cash flow of CNY 312.5 million. While the company maintains a reasonable debt level with CNY 2.39 billion in total debt against CNY 1.45 billion in cash, the negative cash flow generation raises sustainability concerns. The diluted EPS of CNY 0.27 supports a dividend of CNY 0.20 per share, indicating a high payout ratio that may be challenging to maintain given current cash flow constraints. The beta of 0.519 suggests lower volatility than the broader market, potentially appealing to risk-averse investors, but the fundamental cash flow issues present significant risk factors requiring careful monitoring.
Lier Chemical competes in the highly fragmented global agrochemical market, where its competitive position is defined by specialized expertise in pyridine chemistry and intermediate manufacturing. The company's primary advantage lies in its vertical integration, particularly in chloropyridine derivatives which serve as key building blocks for numerous pesticides. This backward integration provides cost control and supply chain reliability advantages over competitors who rely on external sourcing. However, Lier Chemical faces intense competition from both domestic Chinese manufacturers and multinational giants. The company's focus on low-toxicity, low-residue pesticides aligns with global regulatory trends but requires continuous R&D investment to maintain technological leadership. Financially, Lier Chemical's scale is modest compared to industry leaders, limiting its ability to compete on pricing in commodity segments. The negative free cash flow position indicates potential competitive pressures on margins or aggressive capacity expansion that may not yield immediate returns. The company's international presence provides diversification benefits but exposes it to currency and trade policy risks. While Lier Chemical's technical capabilities in specific chemical pathways provide differentiation, its overall competitive positioning is challenged by larger players with broader product portfolios, stronger distribution networks, and greater financial resources for R&D and market development.