| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 66.08 | -39 |
| Intrinsic value (DCF) | 43.19 | -60 |
| Graham-Dodd Method | 14.38 | -87 |
| Graham Formula | 23.43 | -78 |
Jiangsu Hengli Hydraulic Co., Ltd. is a leading Chinese manufacturer of precision hydraulic components and systems, serving global industrial markets since its founding in 1990. Headquartered in Changzhou, China, the company specializes in hydraulic cylinders, motors, pumps, control valves, and electronic controls that are essential for mobile machinery, industrial engineering, offshore operations, energy technology, and tunnel boring machines. As a key player in the industrial machinery sector, Hengli Hydraulic has established itself as a critical supplier to construction, mining, and manufacturing industries worldwide. The company's vertically integrated operations, including high-precision castings and seamless cold drawing tubing production, provide significant manufacturing advantages. With China's dominance in heavy equipment manufacturing and global infrastructure development driving demand, Hengli Hydraulic occupies a strategic position in the industrial supply chain, combining technical expertise with cost-effective production capabilities.
Jiangsu Hengli Hydraulic presents a compelling investment case with strong financial metrics including robust profitability (26.7% net margin), substantial cash reserves (CNY 7.88 billion) against minimal debt (CNY 16.65 million), and healthy operating cash flow (CNY 2.48 billion). The company's dominant position in China's hydraulic components market and growing international presence provide exposure to global infrastructure and construction cycles. However, investors should consider the company's sensitivity to economic cycles (beta of 1.056), potential trade policy impacts on international operations, and exposure to the volatile construction and mining equipment sectors. The generous dividend yield (approximately 37% payout ratio based on provided data) adds income appeal, but the concentration in Chinese industrial markets represents both opportunity and geopolitical risk.
Jiangsu Hengli Hydraulic has established a strong competitive position through vertical integration, cost leadership, and technological capabilities in mid-to-high range hydraulic components. The company's comprehensive product portfolio covering cylinders, motors, pumps, and control systems allows it to serve diverse industrial applications and capture cross-selling opportunities. Its manufacturing integration, including in-house casting and tubing production, provides cost advantages and quality control that differentiate it from less integrated competitors. Hengli benefits from proximity to China's massive construction and mining equipment manufacturers, which represent both its primary market and a strategic advantage against international competitors. However, the company faces challenges in competing at the very high-end precision hydraulic segment where European and Japanese manufacturers maintain technology leadership. While Hengli has made significant progress in quality and reliability, perception gaps may still exist in certain international markets compared to established Western brands. The company's growth strategy appears focused on expanding its technological capabilities while maintaining cost competitiveness, positioning it to capture market share both domestically and in emerging markets where price-performance ratio is critical.