Stock Analysis & Valuation Yantai Shuangta Food Co., Ltd. (002481.SZ)

• Previous Close: $5.21
• Sector Valuation Confidence Level: Low

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	24.92	378
Intrinsic value (DCF)	2.75	-47
Graham-Dodd Method	1.64	-69
Graham Formula	0.62	-88

Strategic Investment Analysis

Company Overview

Yantai Shuangta Food Co., Ltd. stands as a prominent Chinese food processing company, specializing in the production and sale of vermicelli products under its well-established Longkou brand. Founded in 1992 and headquartered in Zhaoyuan, China, the company has built a strong reputation over three decades. Its core business revolves around a diverse portfolio of vermicelli products, including wide vermicelli, sweet potato circle, and specialized lines like XINLAN and function vermicelli. Beyond traditional vermicelli, Shuangta Food has strategically expanded into the high-growth plant-based protein market, producing and selling value-added derivatives such as pea protein, pea starch, and pea fiber. This diversification positions the company at the intersection of traditional staple foods and modern nutritional trends. Operating within the Consumer Defensive sector's Packaged Foods industry, Shuangta Food benefits from consistent demand for its staple products while leveraging its expertise to capitalize on the global shift towards plant-based diets. The company's integrated approach, from raw material processing to branded consumer goods, creates a resilient business model relevant to both domestic Chinese consumers and international markets seeking sustainable protein sources.

Investment Summary

Yantai Shuangta Food presents a mixed investment profile characterized by its strong brand equity in the traditional vermicelli market against a backdrop of modest profitability. The company's foray into pea protein represents a strategic pivot towards a higher-growth segment, potentially offering future upside. However, with a net income margin of approximately 3.9% on CNY 2.45 billion in revenue, operational efficiency appears challenged. The balance sheet shows a concerning debt level (CNY 1.41 billion) that exceeds its cash position (CNY 1.13 billion), though its low beta of 0.712 suggests lower volatility relative to the broader market, a typical characteristic of consumer defensive stocks. The dividend yield, based on a CNY 0.04 per share payout, provides a modest income component. The primary investment thesis hinges on the successful monetization of its plant-protein division and improved margins in its core business. Key risks include intense competition in the packaged food space, execution risk in its diversification strategy, and leverage concerns.

Competitive Analysis

Yantai Shuangta Food's competitive positioning is bifurcated between its established traditional business and its emerging growth segment. In the vermicelli market, the company's primary advantage is the strong brand recognition of its 'Longkou' vermicelli, a product synonymous with a specific style and quality in China. This brand heritage provides a defensive moat in a commoditized segment. However, the broader packaged vermicelli and noodle market in China is highly fragmented and competitive, with numerous local producers exerting price pressure. Shuangta's more compelling competitive angle lies in its vertical integration into plant-based proteins. By processing peas into both consumer vermicelli and industrial ingredients like pea protein and starch, the company achieves operational synergies and cost advantages. This allows it to compete in the global plant-protein market, where demand is driven by health and sustainability trends. Its weakness, however, is scale; it is a relatively small player compared to global ingredient giants. Its competitive strategy must therefore focus on niche applications, responsiveness to customer needs, and leveraging its proximity to the vast Chinese market. The company's challenge is to effectively allocate capital between defending its core brand and aggressively capturing share in the more lucrative protein ingredients market, where its integrated model is a distinct advantage but where R&D and marketing requirements are significantly higher.

Major Competitors

• V V Food & Beverage Co., Ltd. (600300.SS): V V Food & Beverage is a major Chinese competitor in the vermicelli and starch-based product market. Its strength lies in its large-scale production capacity and extensive distribution network within China, directly competing with Shuangta's core Longkou vermicelli business. However, V V's product portfolio is less diversified into high-value ingredients like pea protein, which is Shuangta's strategic growth area. V V's focus remains predominantly on the consumer branded goods market, making it a direct and formidable rival in the traditional food aisle but less of a threat in the specialized ingredients space.
• Shandong Delisi Food Co., Ltd. (002582.SZ): Shandong Delisi is another significant Chinese player in processed foods, including noodles and frozen dishes. Its competitive strength is its diversified product range that extends beyond vermicelli into more convenient and value-added prepared foods, potentially giving it a broader appeal to modern consumers. Compared to Shuangta, Delisi may have a more developed portfolio in ready-to-eat segments. A key weakness relative to Shuangta is that Delisi is not known as a major player in the plant-based protein ingredient market, which is a key differentiator and future growth engine for Shuangta Food.
• Hengshun Vinegar Industry Co., Ltd. (HSH): While primarily a vinegar producer, Hengshun competes indirectly as a major branded consumer goods company in the Chinese condiment and staple food sector. Its strength is an exceptionally strong brand and distribution network for its core products. Its forays into other food areas mean it could potentially expand into adjacent categories, posing a competitive threat. However, its focus is different, and it does not currently have a significant presence in vermicelli or plant protein, making it a peripheral but potent competitor due to its brand and financial resources.
• Ingredion Incorporated (INGR): As a global leader in ingredient solutions, Ingredion is a major competitor in the plant-based protein space, which is Shuangta's growth segment. Ingredion's strengths are its massive global scale, extensive R&D capabilities, and diverse portfolio of starches and proteins from various raw materials. Compared to Shuangta, Ingredion is a far larger and more technologically advanced competitor. Shuangta's competitive advantage against Ingredion is its focus on pea-based ingredients and its cost position within China, potentially offering a more specialized and regionally-attuned alternative to global giants.