| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 6.60 | 23 |
| Intrinsic value (DCF) | 1.30 | -76 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 0.57 | -89 |
Liuzhou Iron & Steel Co., Ltd. is a prominent Chinese steel producer headquartered in Liuzhou, Guangxi, operating as a subsidiary of Guangxi Liuzhou Iron and Steel Group. Founded in 1958, the company specializes in manufacturing a diverse portfolio of steel products including carbon steel, alloy steel, boiler and pressure vessel plates, automotive steel plates, shipbuilding steel, and various specialized steel grades. Liuzhou Steel serves both domestic and international markets, exporting to ASEAN countries, Japan, South Korea, Chile, Mexico, and Europe. As a key player in China's basic materials sector, the company contributes significantly to the regional economy and infrastructure development. Operating in the highly competitive global steel industry, Liuzhou Steel focuses on producing value-added steel products for construction, automotive, shipbuilding, and industrial applications while navigating the cyclical nature of commodity markets.
Liuzhou Iron & Steel presents a challenging investment case with significant headwinds. The company reported a net loss of CNY 433 million for the period, with negative EPS of -0.17, indicating operational difficulties in a competitive steel market. While the company maintains a substantial cash position of CNY 5.14 billion, it carries significant total debt of CNY 21.9 billion, creating financial leverage concerns. The positive operating cash flow of CNY 2.59 billion suggests some operational efficiency, but capital expenditures of CNY 2.2 billion indicate ongoing investment requirements. The beta of 0.651 suggests lower volatility than the broader market, typical for established industrial companies. The absence of dividends and current unprofitability make this suitable only for investors with high risk tolerance and a bullish outlook on China's steel demand recovery.
Liuzhou Iron & Steel operates in a highly competitive global steel industry dominated by scale players and low-cost producers. The company's competitive positioning is challenged by several factors: its regional focus in Guangxi provides some geographic advantages for serving southern China and ASEAN markets, but it lacks the massive scale of China's top-tier steel producers. The company's diverse product portfolio including specialized steels for automotive, shipbuilding, and pressure vessels represents a strategic differentiation from commodity-focused producers. However, Liuzhou Steel faces intense competition from both domestic giants like Baowu Steel and international producers with advanced technology and efficiency. The company's export presence in ASEAN markets provides some diversification but exposes it to international trade dynamics and competition from other Asian steel producers. Its subsidiary status within Guangxi Liuzhou Iron and Steel Group may provide some operational synergies but also limits independent strategic flexibility. The current financial performance suggests competitive disadvantages in cost structure or market positioning compared to more profitable peers in the industry.