Stock Analysis & Valuation Fujian Yuanli Active Carbon Co.,Ltd. (300174.SZ)

• Previous Close: $16.37
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	27.38	67
Intrinsic value (DCF)	7.58	-54
Graham-Dodd Method	11.27	-31
Graham Formula	1.43	-91

Strategic Investment Analysis

Company Overview

Fujian Yuanli Active Carbon Co., Ltd. stands as a prominent Chinese manufacturer and supplier of activated carbon products, established in 1999 and headquartered in Nanping. Operating within the Basic Materials sector's Specialty Chemicals industry, the company produces a diverse portfolio including powdered, extruded, granular, honeycomb, and supercapacitor activated carbon, alongside sodium silicate products and civil carbon bags. Its products are critical for purification, filtration, and catalytic processes across essential industries such as water treatment, food and beverage, pharmaceuticals, flue gas treatment, and air purification. Yuanli Active Carbon has built a significant international footprint, exporting its solutions across Asia, Europe, the Americas, and other global regions. The company's strategic position in China, a major global manufacturing hub, provides inherent advantages in sourcing and production scalability. With a market capitalization of approximately CNY 6.22 billion, Yuanli leverages its technical expertise to serve the growing global demand for environmental protection and industrial purification solutions, making it a key player in the sustainable industrial supply chain.

Investment Summary

Fujian Yuanli Active Carbon presents a focused investment opportunity in the essential environmental technology and purification materials market. The company demonstrates profitability with a net income of CNY 284 million on revenue of CNY 1.88 billion, translating to a diluted EPS of CNY 0.79 and a dividend payout of CNY 0.13 per share. Its financial position appears manageable with total debt of CNY 313 million against cash and equivalents of CNY 192 million, and it generated positive operating cash flow of CNY 231 million. A beta of 0.958 suggests volatility slightly lower than the broader market. Key investment attractions include its established market position, diverse industrial applications, and exposure to global environmental regulation trends driving demand for activated carbon. Primary risks involve exposure to commodity price fluctuations for raw materials, intense competition in the global activated carbon market, potential impacts from international trade policies, and the capital-intensive nature of the business, as evidenced by significant capital expenditures of CNY -219 million. The investment thesis hinges on the company's ability to maintain its competitive edge and capitalize on increasing environmental standards worldwide.

Competitive Analysis

Fujian Yuanli Active Carbon operates in a highly competitive global activated carbon market, where its competitive advantage is derived from its integrated manufacturing capabilities, diverse product portfolio, and established presence in China, a key sourcing region for raw materials. The company's positioning is that of a volume supplier with a broad application focus, serving everything from water purification and food processing to industrial air treatment and emerging applications like supercapacitors. This diversification helps mitigate risk from cyclical demand in any single end-market. Its location in China provides cost advantages in manufacturing and raw material access, which is crucial in a price-sensitive industry. However, Yuanli faces intense competition from larger, global players with stronger R&D capabilities and deeper customer relationships in high-value segments like pharmaceuticals and specialty chemicals. While its export business demonstrates international competitiveness, it may face challenges competing on technology and brand recognition with Western counterparts in premium markets. The company's scale, while significant in China, is smaller than multinational giants, potentially limiting its investment in cutting-edge research and global marketing. Its competitive strategy likely relies on cost efficiency, reliable quality for mid-tier applications, and leveraging China's manufacturing ecosystem. The critical challenge for Yuanli will be to move up the value chain beyond commodity-grade products to more specialized, high-margin segments where competition is based on technical performance rather than just price.

Major Competitors

• CABOT CORPORATION (CAB.N): Cabot is a global specialty chemicals and performance materials company with a major activated carbon segment. Its strengths include a massive global scale, strong R&D capabilities, and a diverse product portfolio for high-value applications like gas purification and specialty chemicals. Compared to Yuanli, Cabot has superior technological expertise and brand recognition but likely faces higher manufacturing costs. Its weakness relative to Yuanli could be less competitive pricing in standard-grade activated carbon markets.
• QUAKER HOUGHTON (KWR.N): While primarily a metalworking fluids company, Quaker Houghton competes in specific industrial process chemical segments. Its strengths lie in deep customer relationships and technical service in niche industrial markets. Compared to Yuanli's broad activated carbon focus, Quaker Houghton's competition is more indirect and specialized. Its weakness relative to Yuanli is the lack of a dedicated, scaled activated carbon manufacturing operation, making it less of a direct threat in bulk supply.
• Jiangxi Black Cat Carbon Black Inc., Ltd. (002068.SZ): As a fellow Chinese carbon products manufacturer, Black Cat is a direct regional competitor, though its primary focus is carbon black for rubber and plastic industries. Its strength is its dominant position in the Chinese carbon black market and integrated production. Compared to Yuanli, it competes for similar raw materials and industrial customers but in different application segments. A weakness is its narrower product focus, making it less diversified than Yuanli across purification and environmental applications.
• China National Materials Co., Ltd. (Sinoma) (603110.SS): Sinoma is a massive Chinese state-owned enterprise in building materials and equipment. It may compete indirectly in areas like industrial adsorption and environmental solutions. Its strengths are immense scale, government backing, and a vast domestic project portfolio. Compared to Yuanli, Sinoma is a much larger entity but likely less focused and agile in the specialized activated carbon market. A weakness is that its diversified structure may not allow for the specialized focus that Yuanli maintains.
• Kureha Corporation (KUREHA CORP (4023.T)): Kureha is a Japanese chemical company with a significant activated carbon business, particularly in high-performance grades. Its strengths include advanced technology, strong quality control, and a premium brand position, especially in the Asian market. Compared to Yuanli, Kureha likely competes in higher-value segments but at a higher cost base. A weakness relative to Yuanli is less competitive pricing, making it vulnerable in commodity-grade markets where Yuanli excels.
• Haycarb PLC (Haycarb PLC (HAYC.N0000)): Haycarb is a leading manufacturer of activated carbon in the Asian region, with a focus on coconut shell-based products. Its strengths include access to sustainable raw materials (coconut shells) and a strong reputation for quality in specific segments like water treatment and gold recovery. Compared to Yuanli, Haycarb is a regional peer with a similar scale but a different raw material base. A potential weakness is its geographic concentration and reliance on a single raw material source compared to Yuanli's possibly more diversified feedstock.