Stock Analysis & Valuation Xiamen Yanjan New Material Co., Ltd. (300658.SZ)

• Previous Close: $18.00
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	22.42	25
Intrinsic value (DCF)	2.95	-84
Graham-Dodd Method	1.82	-90
Graham Formula	2.11	-88

Strategic Investment Analysis

Company Overview

Xiamen Yanjan New Material Co., Ltd. is a specialized materials manufacturer serving the rapidly growing disposable hygiene products industry. Founded in 2000 and headquartered in Xiamen, China, the company produces essential components including PE perforated films, 3D aperture non-woven fabrics, hot air through non-woven materials, and ADL surge layers. These advanced materials are critical inputs for sanitary napkins, baby diapers, adult incontinence products, and also find applications in medical treatment and food packaging sectors. Operating within the Basic Materials sector's Specialty Chemicals industry, Yanjan New Material has established itself as a key supplier in both domestic Chinese and international markets. The company's focus on innovative material solutions addresses the increasing demand for comfort, absorption, and hygiene in personal care products. With China's aging population and rising disposable incomes driving growth in adult diapers and premium baby care segments, Yanjan occupies a strategic position in the supply chain. The company's technical expertise in non-woven fabric manufacturing and material science enables it to serve major brands in the hygiene products industry, positioning it as a vital partner in the evolving personal care landscape.

Investment Summary

Xiamen Yanjan presents a specialized play on China's growing hygiene products market with moderate financial metrics. The company's ¥2.97 billion market cap reflects its niche positioning, while a beta of 0.238 suggests lower volatility than the broader market. However, investors should note concerning fundamentals: the company generated ¥1.48 billion in revenue but only ¥27.3 million in net income, representing thin margins of approximately 1.8%. While operating cash flow of ¥129.5 million appears healthy, substantial capital expenditures of ¥232.3 million indicate significant ongoing investments. The balance sheet shows ¥184.5 million in cash against ¥790.2 million in total debt, suggesting some leverage concerns. The modest dividend yield of 0.07 per share provides limited income appeal. The investment case hinges on Yanjan's ability to improve profitability while capitalizing on demographic trends favoring hygiene product demand, particularly in China's aging population segment.

Competitive Analysis

Xiamen Yanjan New Material competes in the highly specialized niche of materials for disposable hygiene products, where competitive advantage derives from technical expertise, production scale, and customer relationships. The company's focus on PE perforated films and advanced non-woven fabrics positions it as a solutions provider rather than a commodity manufacturer. Yanjan's competitive positioning appears moderate, with its ¥1.48 billion revenue suggesting it operates as a mid-sized player in China's fragmented specialty materials market. The company's technology in 3D aperture non-woven and hot air through non-woven materials represents specialized capabilities that may provide some differentiation from general non-woven fabric producers. However, the thin 1.8% net margin indicates intense price competition and limited pricing power within the supply chain. Yanjan's international operations suggest some success in expanding beyond China's competitive domestic market, though the scale remains modest. The company faces pressure from both upstream raw material cost fluctuations and downstream pressure from large hygiene product manufacturers seeking cost efficiencies. Its competitive advantage likely stems from long-term customer relationships and technical customization capabilities rather than significant scale or brand dominance. The substantial capital expenditures suggest ongoing investments to maintain technological competitiveness, but the debt load of ¥790 million relative to cash reserves may constrain aggressive expansion compared to better-capitalized competitors.

Major Competitors

• Shanghai Zijiang Enterprise Group Co., Ltd. (002324.SZ): Zijiang is a major packaging materials producer that also manufactures non-woven fabrics for hygiene products. The company has significantly larger scale and broader product portfolio than Yanjan, giving it advantages in raw material procurement and customer diversification. However, Zijiang's broader focus may limit its specialization in high-performance hygiene materials where Yanjan competes. The company's established market position provides stability but may reduce flexibility in responding to niche market trends.
• Anhui Wanwei Updated High-Tech Material Industry Co., Ltd. (600063.SS): Wanwei specializes in chemical fibers and new materials, including non-woven fabrics for various applications. The company has strong technical capabilities and larger production scale than Yanjan, particularly in chemical fiber technology. Wanwei's diversified material portfolio provides revenue stability but may dilute focus on the specific hygiene products segment where Yanjan operates. Their established research capabilities represent a competitive threat in developing advanced materials.
• Anhui Guofeng Plastic Co., Ltd. (000859.SZ): Guofeng is a plastic products manufacturer that produces films and packaging materials overlapping with Yanjan's PE film business. The company has strong capabilities in plastic film manufacturing and broader industrial applications. While Guofeng may compete in certain film products, it lacks Yanjan's specialized focus on hygiene product materials and technical expertise in non-woven fabrics specifically designed for absorption and comfort requirements.
• Shanghai M&G Stationery Co., Ltd. (002043.SZ): While primarily a stationery company, M&G has expanded into packaging and material businesses that may overlap with Yanjan's operations. The company's strong brand and distribution network provide advantages, but its core focus remains distant from Yanjan's specialty in hygiene product materials. M&G's scale and financial resources could enable potential diversification into adjacent material segments, representing a long-term competitive consideration.