| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 82.83 | -17 |
| Intrinsic value (DCF) | 7.80 | -92 |
| Graham-Dodd Method | 1.83 | -98 |
| Graham Formula | 0.39 | -100 |
Zhejiang Fenglong Electric Co., Ltd. is a specialized Chinese industrial manufacturer that develops, designs, and produces critical components for the garden equipment and automotive industries. Founded in 2003 and headquartered in Shaoxing, China, the company operates primarily under the Fenglong brand, serving major garden power tool manufacturers and automotive enterprises both domestically and through exports. Fenglong's core product portfolio includes ignition coils, flywheels, and cylinders for garden power tools like trimmers, chainsaws, and hedge trimmers, as well as automotive components such as ABS valves, thermostat covers, and tensioners for transmission, brake, and thermostat systems. As a key supplier in the industrial machinery sector, the company leverages China's manufacturing ecosystem to provide cost-effective components while maintaining quality standards required by global OEMs. Fenglong's dual-market focus positions it at the intersection of consumer outdoor power equipment and automotive supply chains, benefiting from both replacement part demand and original equipment manufacturing relationships. The company's export activities demonstrate its competitive capabilities in international markets, though it remains primarily focused on serving Chinese industrial customers.
Zhejiang Fenglong Electric presents a mixed investment profile with several concerning financial metrics. While the company maintains a modest market capitalization of approximately ¥3.5 billion and operates in stable industrial sectors, its financial performance raises significant concerns. With revenue of ¥478.7 million but net income of only ¥4.6 million, the company demonstrates extremely thin profit margins of less than 1%. The diluted EPS of ¥0.0224 indicates minimal earnings generation relative to its share count. Positive operating cash flow of ¥36.5 million is overshadowed by substantial capital expenditures of -¥40.2 million, suggesting heavy ongoing investment requirements. The company's debt position of ¥203.3 million against cash holdings of ¥163.0 million indicates a net debt situation. The dividend payment of ¥0.15 per share appears generous relative to earnings, potentially unsustainable given the current profitability levels. The low beta of 0.43 suggests defensive characteristics but may also reflect limited growth prospects. Investors should carefully evaluate the company's ability to improve operational efficiency and profitability in competitive manufacturing sectors.
Zhejiang Fenglong Electric operates in highly competitive industrial component manufacturing sectors where scale, technological capability, and customer relationships determine competitive positioning. The company's dual focus on garden equipment components and automotive parts provides some diversification but also exposes it to competition from specialized players in both segments. In the garden equipment component space, Fenglong competes against larger global suppliers that benefit from broader product portfolios and established relationships with major outdoor power equipment OEMs. The company's competitive advantage appears to be its cost structure within China's manufacturing ecosystem and its specialized expertise in specific component categories like ignition systems and flywheels. However, the extremely thin profit margins suggest intense price competition and limited pricing power. In automotive components, Fenglong faces even more formidable competition from established Tier 1 and Tier 2 suppliers with greater technical resources, quality certifications, and global manufacturing footprints. The company's smaller scale limits its ability to compete for major automotive OEM contracts that typically require substantial R&D investment and global supply chain capabilities. Fenglong's export activities indicate some international competitiveness, but its primary strength remains serving Chinese manufacturers where proximity and cost advantages are most pronounced. The competitive landscape requires continuous operational efficiency improvements and potential specialization in niche component categories where larger competitors may have less focus. The company's challenge is to move beyond commodity component manufacturing toward higher-value products with better margins while maintaining cost competitiveness.