| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 25.97 | 123 |
| Intrinsic value (DCF) | 4.28 | -63 |
| Graham-Dodd Method | 3.38 | -71 |
| Graham Formula | 8.69 | -25 |
Zhejiang Cheng Yi Pharmaceutical Co., Ltd. is an established Chinese pharmaceutical manufacturer with a rich history dating back to 1966, originally founded as Wenzhou No. 3 Pharmaceutical Factory. Headquartered in Wenzhou, China, the company specializes in the production and sale of active pharmaceutical ingredients (APIs) and finished dosage forms, primarily capsules and tablets. Operating within China's expansive healthcare sector, Cheng Yi Pharmaceutical serves the critical pharmaceutical supply chain by providing essential generic and specialty drug components. The company's dual focus on both APIs and finished products positions it as an integrated player in the drug manufacturing landscape. With decades of industry experience and a foundation built during China's pharmaceutical industrialization period, Cheng Yi has developed manufacturing capabilities that cater to domestic healthcare needs. The company's transition from a state-owned factory to a publicly traded entity reflects China's evolving pharmaceutical industry dynamics and the growing importance of specialized drug manufacturers in supporting the country's healthcare infrastructure.
Zhejiang Cheng Yi Pharmaceutical presents a conservative investment profile with modest financial performance and low market volatility. The company generated CNY 714 million in revenue with a healthy net income of CNY 201 million, representing a solid 28% net margin. With a market capitalization of approximately CNY 4.4 billion, the company maintains reasonable financial health with positive operating cash flow of CNY 206 million and manageable debt levels. The low beta of 0.245 suggests minimal correlation with broader market movements, potentially offering defensive characteristics. However, the company's relatively small scale compared to larger Chinese pharmaceutical peers and limited international presence may constrain growth opportunities. The dividend payment of CNY 0.25 per share provides income appeal, but investors should consider the company's exposure to domestic regulatory changes and pricing pressures in China's pharmaceutical market.
Zhejiang Cheng Yi Pharmaceutical operates in China's highly competitive generic pharmaceutical market, where scale, regulatory compliance, and manufacturing efficiency determine competitive positioning. The company's primary competitive advantage lies in its integrated business model spanning both API production and finished dosage forms, which provides supply chain control and margin stability. With origins dating to 1966, Cheng Yi benefits from long-standing manufacturing experience and established relationships within China's pharmaceutical distribution network. However, the company faces significant challenges against larger domestic competitors who possess greater R&D capabilities, broader product portfolios, and stronger international presence. Cheng Yi's relatively modest revenue base of CNY 714 million positions it as a mid-tier player in a market dominated by pharmaceutical giants. The company's focus on basic dosage forms like capsules and tablets, while providing stable demand, may limit differentiation in an increasingly specialized industry. Regulatory compliance with China's evolving drug quality standards represents both a challenge and opportunity, as stricter requirements could disadvantage smaller players while rewarding those with robust quality systems. Cheng Yi's regional concentration in Zhejiang province provides local market familiarity but may constrain national expansion ambitions against competitors with broader geographic reach.