| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 40.13 | 39 |
| Intrinsic value (DCF) | 12.35 | -57 |
| Graham-Dodd Method | 9.25 | -68 |
| Graham Formula | 26.92 | -7 |
Zhejiang Xinhua Chemical Co., Ltd. is a prominent Chinese chemical manufacturer with a legacy dating back to 1967, headquartered in Jiande, Zhejiang Province. Operating within the Basic Materials sector, the company specializes in the production and trade of a diverse portfolio of chemical products, serving both domestic Chinese and international markets. Xinhua Chemical's core offerings include fatty amines, organic solvents, flavors, hydrogen peroxide organic amine series, and various inorganic chemicals. The company has further diversified into specialty segments such as aroma chemicals (including turpentine oil derivatives and sandal series) and fine chemicals like peroxide series and synthetic ammonia. This diversified product range positions Xinhua Chemical as a versatile player in the chemical industry, catering to various downstream applications. Listed on the Shanghai Stock Exchange, the company leverages its long-standing operational experience and integrated manufacturing capabilities to maintain its market position. The chemical industry in China is characterized by intense competition and evolving regulatory standards, requiring continuous innovation and operational efficiency, areas where Xinhua Chemical's established presence provides a foundational advantage.
Zhejiang Xinhua Chemical presents a mixed investment profile characterized by moderate profitability and a conservative financial structure. For FY 2024, the company reported revenue of approximately CNY 2.97 billion and net income of CNY 226.9 million, translating to a diluted EPS of CNY 1.17 and a net profit margin of around 7.6%. A key positive is the company's low beta of 0.26, suggesting lower volatility compared to the broader market, which may appeal to risk-averse investors. The balance sheet shows a manageable debt level (CNY 770 million) relative to cash holdings (CNY 756 million), indicating a reasonable liquidity position. However, the investment case is tempered by modest cash flow generation (operating cash flow of CNY 311 million) and significant capital expenditures (CNY -225 million), which may pressure free cash flow. The dividend per share of CNY 0.45 offers a yield, but overall growth prospects appear constrained by the competitive nature of the chemical industry. The primary investment appeal lies in its stability and niche product segments, but investors should weigh this against the challenges of margin compression and the capital-intensive nature of the business.
Zhejiang Xinhua Chemical operates in the highly fragmented and competitive Chinese chemical industry. Its competitive positioning is defined by a diversified but not necessarily dominant product portfolio spanning fatty amines, solvents, and aroma chemicals. The company's advantages likely stem from its long history (founded in 1967), which implies established production processes, customer relationships, and regional brand recognition within China. Its product diversification across multiple chemical segments provides some insulation against downturns in any single market. However, Xinhua Chemical's scale is modest compared to domestic chemical giants, which limits its bargaining power for raw materials and its ability to compete on price in commoditized products. The company's focus on specialties like aroma chemicals and custom chemicals is a strategic differentiator, but it likely faces intense competition from both larger integrated chemical companies and smaller, more agile specialty chemical producers. Its international operations, mentioned in the description, suggest an effort to diversify geographically, but the extent and success of this expansion are unclear from the provided data. The company's low beta indicates it is not perceived as a high-growth, high-risk player, but rather as a stable, established operator. Ultimately, Xinhua Chemical's competitive edge appears to be its longevity and broad-based product offering within its mid-tier scale, rather than a clear technological or cost leadership position in any specific niche. Its future success will depend on its ability to efficiently manage operations and selectively invest in higher-margin specialty products.