| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 18.32 | 102 |
| Intrinsic value (DCF) | 5.31 | -42 |
| Graham-Dodd Method | 7.06 | -22 |
| Graham Formula | 0.39 | -96 |
Shenma Industrial Co., Ltd. is a prominent Chinese specialty chemicals manufacturer operating as a subsidiary of China Pingmei Shenma Energy Chemical Group Co., Ltd. Headquartered in Pingdingshan, China, the company specializes in producing and distributing a diverse portfolio of chemical and chemical fiber products both domestically and internationally. Shenma's core product lines include nylon industrial yarns, cord fabrics, nylon salt, nylon slices, dipped fabrics, and advanced materials such as automobile safety airbag wire, nylon resins, modified engineering plastics, and aramid fibers. The company operates across the entire chemical value chain, from basic chemicals like adipic acid, 1,6-hexanediamine, cyclohexanol, and nitric acid to finished specialty products. As a key player in China's basic materials sector, Shenma serves critical industrial markets including automotive safety, industrial materials, and advanced textiles, positioning itself as an integrated chemical solutions provider in the rapidly evolving Asian specialty chemicals landscape.
Shenma Industrial presents a mixed investment profile with significant challenges. The company operates with substantial financial leverage, evidenced by total debt of CNY 12.08 billion against cash reserves of CNY 4.96 billion, creating interest coverage concerns. While the company generated CNY 13.97 billion in revenue, net income of only CNY 33.53 million reflects extremely thin margins of approximately 0.24%, indicating operational inefficiencies or competitive pricing pressures. The negative capital expenditures of -CNY 2.71 billion combined with modest operating cash flow of CNY 317 million suggests potential underinvestment in maintaining competitive production capabilities. The beta of 1.39 indicates higher volatility than the market, which may concern risk-averse investors. The modest dividend yield provides some income appeal, but the overall financial metrics suggest a company facing significant headwinds in a capital-intensive industry.
Shenma Industrial operates in the highly competitive specialty chemicals sector where scale, technological capability, and cost efficiency determine competitive positioning. The company's integrated production model, spanning from basic chemicals to finished specialty products, provides some cost advantages and supply chain stability. Its diverse product portfolio, particularly in nylon-based products and aramid fibers, offers some diversification benefits across industrial applications. However, Shenma faces intense competition from both domestic Chinese chemical giants and international specialty chemical producers with superior R&D capabilities and global distribution networks. The company's relatively low net income margin suggests it may be competing primarily on price rather than technological differentiation. Its position as a subsidiary of a larger energy chemical group could provide some strategic advantages in raw material sourcing but may also limit independent strategic flexibility. The negative capital expenditure figure raises concerns about the company's ability to maintain technological competitiveness against better-capitalized rivals. In the Chinese market, Shenma must compete with state-owned enterprises enjoying preferential financing and larger private chemical companies with greater scale advantages. For international expansion, the company faces established global players with stronger brand recognition and technical service capabilities.