| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 22.16 | 83 |
| Intrinsic value (DCF) | 6.22 | -49 |
| Graham-Dodd Method | 3.33 | -73 |
| Graham Formula | 2.15 | -82 |
Zhejiang Wansheng Co., Ltd. is a leading Chinese specialty chemicals manufacturer specializing in high-value organic phosphorus-based flame retardants, special amines, and cardanol-based curing agents and diluents. Founded in 1995 and headquartered in Linhai, China, the company has established itself as a critical supplier to multiple industrial sectors including automotive, furniture, electronics, and construction. Wansheng's product portfolio serves essential applications in engineering plastics, insulation materials, polyurethane systems, and various chemical intermediates. The company's flame retardants are particularly crucial for meeting stringent fire safety standards in automotive components and electronic devices, while its amine products find applications in PU manufacturing, pharmaceuticals, agrochemicals, and household chemicals. Operating in China's massive chemical market, Zhejiang Wansheng leverages its technical expertise and manufacturing scale to serve domestic industrial growth while positioning for international expansion opportunities in the specialty chemicals space. The company represents a key player in China's basic materials sector, contributing to supply chain resilience in high-performance chemical additives.
Zhejiang Wansheng presents a mixed investment profile with moderate financial health but concerning profitability metrics. The company maintains a solid cash position of CNY 1.25 billion against total debt of CNY 1.32 billion, indicating reasonable liquidity. However, with a market capitalization of CNY 5.85 billion, the stock trades at approximately 56x trailing earnings based on net income of CNY 103 million, suggesting premium valuation relative to current earnings power. The company generated positive operating cash flow of CNY 378 million, though significant capital expenditures of CNY 420 million indicate ongoing investment in capacity. The low beta of 0.508 suggests defensive characteristics with lower volatility than the broader market. Key risks include compressed profit margins, high valuation multiples, and exposure to cyclical industrial demand in China. The dividend yield appears modest at approximately 0.8% based on current share price assumptions.
Zhejiang Wansheng competes in the highly fragmented and competitive Chinese specialty chemicals market, where it has carved a niche in phosphorus-based flame retardants and specialty amines. The company's competitive positioning relies on its technical expertise in organic phosphorus chemistry and its integrated manufacturing capabilities. Wansheng's focus on flame retardants for engineering plastics and PU applications aligns with growing safety regulations in automotive and electronics sectors, providing some insulation from pure commodity chemical competition. However, the company faces significant pressure from larger domestic chemical conglomerates that benefit from greater scale, broader product portfolios, and stronger R&D capabilities. International competitors with superior technology and global distribution networks also represent a threat, particularly in high-value applications. Wansheng's competitive advantage appears limited to regional cost leadership and responsive customer service in the Chinese market rather than technological differentiation. The company's moderate scale (CNY 2.96 billion revenue) suggests it operates as a mid-tier player rather than a market leader, potentially limiting pricing power and margin stability. Its future competitiveness will depend on continued innovation, cost control, and ability to navigate China's evolving environmental regulations and industrial policy directions.