| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 18.91 | 175 |
| Intrinsic value (DCF) | 3.26 | -53 |
| Graham-Dodd Method | 1.96 | -71 |
| Graham Formula | n/a |
Anhui Liuguo Chemical Co., Ltd. is a prominent Chinese agricultural inputs company specializing in fertilizer production and chemical manufacturing. Founded in 1985 and headquartered in Tongling, China, the company operates as an integrated producer of phosphorus-based fertilizers, compound fertilizers, and specialty chemicals including fine phosphates, hydrogen peroxide, and phosphogypsum products. Liuguo Chemical serves the domestic Chinese agricultural market while maintaining export operations to key Asian markets including South Korea, India, and Taiwan. As a basic materials sector company, Liuguo plays a critical role in China's agricultural supply chain by providing essential crop nutrients and chemical inputs that support food production and agricultural productivity. The company's vertically integrated operations span from raw material processing to finished fertilizer production, positioning it as a significant player in China's agricultural inputs industry with specialized expertise in phosphorus chemistry and compound fertilizer formulations.
Anhui Liuguo Chemical presents a mixed investment profile with several concerning financial metrics. The company's minimal net income of CNY 25.2 million on revenue of CNY 6.25 billion reflects extremely thin margins of approximately 0.4%, indicating significant operational challenges or competitive pressures. While the company maintains a substantial cash position of CNY 1.33 billion, its total debt of CNY 1.92 billion results in a leveraged balance sheet. The absence of dividend payments and low diluted EPS of CNY 0.05 further diminish attractiveness for income-seeking investors. Positive operating cash flow of CNY 388.6 million suggests some operational viability, but high capital expenditures relative to earnings raise questions about capital allocation efficiency. The low beta of 0.574 indicates relative stability compared to the broader market, but the fundamental profitability issues present substantial investment risks.
Anhui Liuguo Chemical operates in the highly competitive Chinese fertilizer industry, where scale, cost efficiency, and distribution networks determine competitive positioning. The company's specialization in phosphorus-based products provides some differentiation from generic fertilizer producers, particularly through its expertise in fine phosphates and compound fertilizers. However, its extremely thin profit margins suggest either intense price competition, high input costs, or operational inefficiencies compared to industry leaders. The company's export presence in Asian markets indicates some international competitiveness, but domestic Chinese fertilizer producers face structural challenges including environmental regulations, energy costs, and consolidation pressures. Liuguo's vertical integration in phosphorus chemistry could provide cost advantages in raw material sourcing, but this doesn't appear to translate to bottom-line profitability. The agricultural inputs sector in China is characterized by fragmentation and government influence on pricing, which may limit pricing power for mid-sized producers like Liuguo. The company's competitive position appears challenged by larger, more efficient producers with better economies of scale and stronger financial profiles.