| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 67.21 | 923 |
| Intrinsic value (DCF) | 2.42 | -63 |
| Graham-Dodd Method | 1.82 | -72 |
| Graham Formula | 2.93 | -55 |
Longxing Chemical Stock Co., Ltd. is a prominent Chinese specialty chemicals manufacturer specializing in carbon black and related products. Founded in 1994 and headquartered in Shahe, China, the company has established itself as a key player in the basic materials sector through its comprehensive product portfolio including carbon black, precipitated silica, and polyvinylidene fluoride. Longxing Chemical's carbon black products serve critical applications across multiple industries, particularly in tire manufacturing for all-steel and semi-steel radial tires, as well as automotive components like sealing strips, oil tubes, and brake pads. The company's products also find applications in rubber, building materials, electronics, plastics, paints, and chemical fibers, demonstrating broad industrial relevance. Operating in China's massive chemical industry, Longxing Chemical leverages its manufacturing expertise and the Longxing brand to maintain competitive positioning in both domestic and international markets. The company's strategic focus on specialty chemicals positions it to benefit from growing demand in automotive and industrial sectors, while navigating the cyclical nature of the chemical industry through product diversification and technological innovation.
Longxing Chemical presents a mixed investment profile with several concerning financial indicators. While the company maintains a modest market capitalization of approximately CNY 3.17 billion and reported revenue of CNY 4.36 billion for the period, its negative operating cash flow of CNY -58.2 million raises liquidity concerns. The company's net income of CNY 142 million and diluted EPS of CNY 0.25 demonstrate profitability, but the significant capital expenditures of CNY -383.8 million indicate substantial ongoing investment requirements. With total debt of CNY 1.75 billion against cash equivalents of CNY 311 million, the company's leverage position warrants careful monitoring. The dividend payment of CNY 0.12 per share provides some shareholder return, but the combination of negative cash flow and high capital spending suggests potential financial strain. Investors should closely watch the company's ability to improve operational efficiency and cash generation in China's competitive chemical market.
Longxing Chemical operates in the highly competitive global carbon black market, where it faces pressure from both domestic Chinese producers and international giants. The company's competitive positioning is primarily centered on its domestic market presence and product diversification into precipitated silica and polyvinylidene fluoride alongside its core carbon black business. This diversification provides some insulation against carbon black market cyclicality but also spreads resources across multiple product lines. Longxing's competitive advantages include its established manufacturing infrastructure in China, which benefits from proximity to key customers in the automotive and tire industries. However, the company faces significant challenges from larger competitors with greater scale, technological resources, and global distribution networks. The carbon black industry is characterized by intense price competition, particularly in standard-grade products, forcing manufacturers to compete on cost efficiency and product quality. Longxing's negative operating cash flow suggests potential operational inefficiencies compared to more financially stable competitors. The company's ability to compete effectively depends on maintaining cost competitiveness, investing in product innovation, and navigating environmental regulations that are increasingly stringent in China's chemical sector. While Longxing benefits from China's large domestic market, it must contend with overcapacity issues and fluctuating raw material costs that impact profitability across the industry.