Stock Analysis & Valuation Shenzhen Kedali Industry Co., Ltd. (002850.SZ)

• Previous Close: $154.50
• Sector Valuation Confidence Level: Low

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	87.14	-44
Intrinsic value (DCF)	703.25	355
Graham-Dodd Method	46.70	-70
Graham Formula	119.16	-23

Strategic Investment Analysis

Company Overview

Shenzhen Kedali Industry Co., Ltd. is a prominent Chinese manufacturer specializing in precision components for the rapidly growing lithium battery and automotive sectors. Founded in 1996 and headquartered in Shenzhen, the company has established itself as a critical supplier in the technology hardware, equipment, and parts industry. Kedali's core business involves the production and sale of lithium battery precision structural parts and automotive structural parts, complemented by auto parts assembly services. Its products are essential for a diverse range of high-growth applications, including new energy vehicles (NEVs), portable electronics, power tools, and energy storage power stations. As a key player in the global supply chain for electrification and clean energy technologies, Kedali benefits from its strategic location within China's manufacturing hub, positioning it to capitalize on the worldwide transition towards electric mobility and sustainable energy solutions. The company's expertise in precision manufacturing for demanding applications makes it a vital partner for leading brands in the automotive and consumer electronics industries.

Investment Summary

Shenzhen Kedali presents an attractive investment profile tied directly to the secular growth of the electric vehicle and energy storage markets. With a market capitalization of approximately CNY 44.1 billion, the company demonstrates strong financial health, evidenced by robust profitability with net income of CNY 1.47 billion on revenue of CNY 12.03 billion, translating to a high diluted EPS of CNY 5.44. The company's solid operating cash flow of CNY 2.15 billion comfortably covers its capital expenditures, indicating efficient operations and the ability to fund growth. A moderate beta of 0.678 suggests lower volatility compared to the broader market, which may appeal to risk-conscious investors. Key risks include exposure to the cyclical nature of the automotive and consumer electronics industries, potential supply chain disruptions, and intense competition within the Chinese manufacturing sector. The generous dividend per share of CNY 2.00 signals management's confidence in the company's cash flow generation and commitment to shareholder returns.

Competitive Analysis

Shenzhen Kedali's competitive positioning is strengthened by its deep specialization in precision structural components for lithium batteries, a niche but critical segment within the broader EV and energy storage supply chains. Its long-standing presence since 1996 has allowed it to build significant technical expertise and establish trusted relationships with major manufacturers. The company's competitive advantage lies in its integrated capabilities, offering not just component manufacturing but also assembly services, which adds value for clients seeking streamlined supply chains. Being headquartered in Shenzhen, a global hub for electronics manufacturing, provides Kedali with proximity to a dense ecosystem of suppliers, talent, and potential customers. However, the company operates in a highly competitive landscape populated by numerous specialized manufacturers. Its success is heavily leveraged to the adoption rates of NEVs and energy storage systems in China and abroad. While its financial metrics are strong, maintaining technological parity and cost competitiveness against both domestic and international players is a continuous challenge. The company's future growth will depend on its ability to innovate, scale production efficiently, and secure long-term contracts with leading battery and automotive OEMs.

Major Competitors

• Contemporary Amperex Technology Co. Limited (CATL) (300750.SZ): CATL is the world's largest battery manufacturer for EVs, representing both a major potential customer and a competitive threat. Its immense scale and vertical integration allow it to produce many components in-house, which could limit addressable market opportunities for Kedali. However, as a specialist supplier, Kedali could potentially offer CATL more advanced or cost-effective components than its internal operations, creating a symbiotic relationship. CATL's primary strength is its market dominance and R&D capabilities, while a weakness is the capital intensity of its vertically integrated model.
• Ganfeng Lithium Co., Ltd. (002460.SZ): Ganfeng is a global leader in lithium compounds and metals, operating further upstream in the battery supply chain. It is not a direct competitor for precision parts manufacturing but is a key player in the overall lithium ecosystem. Its strength lies in controlling critical raw materials, which gives it significant pricing power. For Kedali, companies like Ganfeng influence the cost structure of its end customers. Ganfeng's weakness is exposure to volatile commodity prices, a risk that Kedali, as a manufacturer, is somewhat insulated from.
• BYD Company Limited (002594.SZ): BYD is a highly vertically integrated Chinese automaker and battery producer. It manufactures its own batteries and many components for its EVs, making it a significant competitive force. BYD's strength is its closed-loop ecosystem, which controls costs and ensures supply chain security. This vertical integration is a direct threat to component suppliers like Kedali, as it reduces the available market. A weakness for BYD is that maintaining such broad vertical integration requires massive capital investment and can sometimes lead to less specialized technology compared to best-in-class component specialists like Kedali.
• EVE Energy Co., Ltd. (300014.SZ): EVE Energy is a major Chinese lithium battery manufacturer, making it a direct peer in the battery supply chain and a potential competitor for certain structural components. EVE's strength is its strong market position as a key supplier to international consumer electronics and automotive companies. Like other large battery makers, it may internalize some component production. Kedali's potential advantage lies in being a specialized supplier that can offer superior quality or innovation for specific high-performance applications that larger players may not focus on.