| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 28.28 | 378 |
| Intrinsic value (DCF) | 3.89 | -34 |
| Graham-Dodd Method | 4.19 | -29 |
| Graham Formula | 2.02 | -66 |
Liuzhou Liangmianzhen Co., Ltd. is a diversified Chinese consumer goods company with a rich heritage dating back to 1941. Headquartered in Liuzhou, China, the company operates primarily in the oral care segment through its flagship LMZ Herbal and Fangcao toothpaste brands, alongside toothbrushes and mouthwashes. Beyond oral hygiene, Liangmianzhen has expanded into body care, facial care products, sanitary papers, sucralose sweeteners, medical products, and cleaning solutions, demonstrating significant diversification. The company also maintains real estate development and travel services operations. With distribution spanning China, Hong Kong, Macau, North America, Western Europe, South Asia, and Africa, Liuzhou Liangmianzhen leverages its established brand recognition and manufacturing capabilities to serve both domestic and international markets in the competitive consumer defensive sector.
Liuzhou Liangmianzhen presents a mixed investment profile with several notable strengths and challenges. The company operates in the defensive consumer products sector, which typically provides stability during economic downturns. With a market capitalization of approximately CNY 3.51 billion and a beta of 0.487, the stock demonstrates lower volatility than the broader market. However, financial metrics raise concerns - the company generated only CNY 81.1 million net income from CNY 1.05 billion revenue, representing thin margins of approximately 7.7%. Operating cash flow of CNY 14.3 million appears weak relative to operations, and capital expenditures exceeded operating cash flow. The company maintains a strong liquidity position with CNY 1.27 billion in cash against modest debt of CNY 94.5 million, providing financial flexibility. The 0.03 CNY dividend offers a modest yield but reflects management's commitment to shareholder returns.
Liuzhou Liangmianzhen operates in the highly competitive Chinese consumer products market, where it faces intense competition from both multinational giants and domestic players. The company's competitive positioning is characterized by its herbal and traditional Chinese medicine positioning in oral care, which differentiates it from mainstream chemical-based products. This niche focus on herbal formulations provides some protection against direct competition with global brands but limits its addressable market. The company's diversification into multiple product categories (personal care, medical products, sweeteners, cleaning solutions, and real estate) creates operational complexity but may provide revenue stability. However, this diversification likely dilutes management focus and resources that could be concentrated on core competencies. Financially, the company's thin margins suggest either pricing pressure, inefficient operations, or both - concerning indicators in a competitive market. The strong cash position provides strategic flexibility for potential acquisitions or market expansion, but the company's international presence remains limited compared to global competitors. The real estate development arm represents an unrelated diversification that may not create synergistic value with the consumer products business.