| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 29.22 | -13 |
| Intrinsic value (DCF) | 33.55 | 0 |
| Graham-Dodd Method | 1.33 | -96 |
| Graham Formula | 3.14 | -91 |
Ningbo Henghe Precision Industry Co., Ltd. is a specialized Chinese manufacturer at the forefront of precision industrial components, serving diverse global sectors from its headquarters in Cixi. Founded in 1992 and publicly listed on the Shenzhen Stock Exchange, the company has evolved from its origins as a mold specialist into a comprehensive precision industry solutions provider, reflected in its name change in 2021. Its core business encompasses the research, development, design, and manufacturing of precision molds, precision components, and injection molding products. The company's product portfolio is strategically diversified across high-growth end markets, including lightweight automotive parts (such as all-plastic tailgates and engine covers), critical components for home appliances (vacuum cleaners, washing machines), consumer electronics (drones, beauty instruments), and medical accessories. This diversification mitigates reliance on any single industry cycle. Operating within the Industrials sector, specifically Metal Fabrication, Ningbo Henghe leverages its deep technical expertise in precision engineering to cater to the increasing demand for miniaturization, weight reduction, and high-performance parts in the automotive and electronics industries, positioning it as a key player in China's advanced manufacturing ecosystem.
Ningbo Henghe presents a profile of a small-cap, niche industrial manufacturer with a low beta (0.188), suggesting lower volatility relative to the broader market. The investment case is nuanced; with a market capitalization of approximately CNY 8.52 billion, the company is profitable, reporting net income of CNY 38.0 million on revenue of CNY 751.0 million for the period, translating to a diluted EPS of CNY 0.17. A positive operating cash flow of CNY 49.5 million is a strength, though it was overshadowed by significant capital expenditures of CNY -113.7 million, indicating heavy investment for future growth. The company maintains a dividend policy, paying CNY 0.135 per share. Key risks include a debt load of CNY 332.2 million against cash reserves of CNY 47.3 million, which warrants monitoring, and the capital-intensive nature of its business. The attractiveness hinges on its positioning within strategic supply chains like automotive lightweighting and consumer electronics, but investors should weigh its growth investments against current profitability and leverage.
Ningbo Henghe Precision Industry operates in the highly competitive and fragmented precision manufacturing and metal fabrication industry in China. Its competitive positioning is defined by its vertical integration from precision mold design and manufacturing to the production of final components and assemblies. This integrated model provides control over quality, cost, and lead times, which is a significant advantage when serving clients in fast-paced industries like consumer electronics and automotive. The company's strategic diversification across automotive, home appliances, electronics, and medical equipment insulates it from downturns in any single sector. Its focus on developing specialized products like all-plastic automotive components demonstrates an ability to innovate in response to market trends, such as vehicle lightweighting for improved fuel efficiency. However, its competitive advantage is tempered by the scale of its operations. With revenue of CNY 751 million, it is a small to mid-sized player competing against much larger domestic and international industrial conglomerates that possess greater financial resources, broader global footprints, and more extensive R&D capabilities. Its success is likely tied to its ability to act as a agile, high-quality supplier for specific component niches rather than competing on volume across broad product categories. The company's future positioning will depend on its capacity to continuously advance its technological capabilities, maintain cost competitiveness, and deepen relationships with leading OEMs in its target markets.