Stock Analysis & Valuation Nanjing Julong Science&Technology Co.,LTD (300644.SZ)

• Previous Close: $34.76
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	514.81	1381
Intrinsic value (DCF)	128.26	269
Graham-Dodd Method	7.76	-78
Graham Formula	29.68	-15

Strategic Investment Analysis

Company Overview

Nanjing Julong Science & Technology Co., Ltd. is a prominent Chinese manufacturer specializing in high-performance modified plastics and wood-plastic composites. Founded in 1999 and headquartered in Nanjing, the company has evolved from its origins as a chemical industrial firm into a technology-driven materials specialist. Julong's diverse product portfolio includes engineered plastics such as PA66, PA6, PP, LFT, PC, ABS, PBT, and TPE, which serve critical applications across automotive manufacturing, high-speed railway components, electronic appliances, tooling equipment, and sports/recreation products. Operating within China's robust Basic Materials sector, the company leverages its technical expertise to develop customized material solutions that meet stringent industry requirements for durability, weight reduction, and performance. As China continues to advance its manufacturing capabilities and infrastructure development, Nanjing Julong occupies a strategic position in the supply chain for advanced materials, supporting the country's industrial modernization and technological upgrading initiatives. The company's focus on research and development enables it to cater to evolving market demands while maintaining competitive positioning in the specialized chemicals landscape.

Investment Summary

Nanjing Julong presents a mixed investment profile with several notable considerations. The company operates in a strategically important sector within China's manufacturing ecosystem, benefiting from exposure to growing end-markets like automotive and infrastructure. However, with a market capitalization of approximately 3.87 billion CNY and modest net income of 84.3 million CNY (representing a thin 3.5% net margin), the company demonstrates limited profitability despite substantial revenue of 2.39 billion CNY. The low beta of 0.479 suggests relative stability compared to broader market movements, which may appeal to risk-averse investors. Positive operating cash flow of 123.4 million CNY provides some financial flexibility, though the company maintains moderate debt levels at 430.7 million CNY against cash reserves of 142.7 million CNY. The dividend yield appears reasonable with a 0.25 CNY per share distribution. Key risks include intense competition in China's specialty chemicals sector, potential raw material price volatility, and dependence on the health of domestic manufacturing sectors. Investors should monitor the company's ability to improve profitability margins and maintain technological competitiveness.

Competitive Analysis

Nanjing Julong operates in China's highly competitive specialty chemicals and modified plastics market, where it faces significant pressure from both domestic giants and specialized players. The company's competitive positioning is defined by its focus on specific application areas like automotive, high-speed rail, and electronics, which allows for targeted technological development but also limits market diversification. Julong's moderate scale (2.39 billion CNY revenue) places it in the mid-tier segment of the market, lacking the economies of scale enjoyed by industry leaders while potentially offering more flexibility and customization capabilities. The company's technological expertise in modifying various plastic polymers represents its primary competitive advantage, enabling it to develop tailored solutions for specific customer requirements. However, this advantage is contingent on continuous R&D investment, which may be challenging given the company's modest profitability. Julong's geographic focus within China provides deep market knowledge and distribution networks but also exposes it to domestic economic cycles and policy changes. The company's competitive challenges include competing with larger players who benefit from superior R&D budgets, global supply chains, and broader product portfolios. Success in this market requires balancing technological specialization with cost competitiveness, particularly as customers increasingly demand higher performance at lower prices. Julong's future positioning will depend on its ability to defend niche applications while potentially expanding into adjacent high-growth segments within the advanced materials space.

Major Competitors

• Zhejiang Hailide New Material Co., Ltd. (002064.SZ): Zhejiang Hailide is a significant competitor in China's modified plastics market with stronger financial scale and broader product applications. The company has established strong positions in automotive, home appliances, and electronics sectors, benefiting from larger production capacity and more extensive R&D capabilities. Compared to Nanjing Julong, Hailide typically demonstrates higher revenue and profitability metrics, giving it advantages in pricing competition and investment capacity. However, Hailide's larger size may reduce its flexibility in serving specialized, custom-oriented market segments where Julong might compete effectively.
• Anhui Guofeng Plastic Co., Ltd. (000859.SZ): Anhui Guofeng specializes in plastic pipe and profile manufacturing, overlapping with Julong's wood-plastic composite business. The company has established strong positions in construction and infrastructure materials, with significant scale advantages in production and distribution. Guofeng's focus on building materials represents both a competitive threat in specific segments and a market differentiation from Julong's more diversified application approach. The company's strengths include established customer relationships in construction sectors, though it may have less specialized expertise in high-performance engineering plastics for automotive and electronic applications where Julong competes.
• Silver Age Technology Co., Ltd. (300221.SZ): Silver Age Technology competes directly in modified plastics and polymer materials, particularly for automotive and electronic applications. The company has developed technical expertise in high-performance materials similar to Julong's focus areas. Silver Age typically demonstrates competitive technological capabilities and may have advantages in certain specialized material formulations. However, as a similarly sized specialized player, both companies face challenges competing against industry giants, potentially creating opportunities for collaboration or niche specialization rather than direct head-to-head competition across all segments.
• HTD Biosystems (688003.SH): While not a direct competitor in all segments, HTD Biosystems represents competition in advanced material technologies and specialty chemicals. The company's focus on high-tech applications and research-intensive products creates competitive pressure in innovation-driven market segments. HTD's listing on Shanghai's STAR Market reflects its technology-focused positioning, which may challenge Julong in attracting technical talent and research partnerships. However, HTD's typically different application focus reduces direct product competition while representing alternative investment opportunities within China's advanced materials sector.