| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 35.41 | 97 |
| Intrinsic value (DCF) | 49.88 | 177 |
| Graham-Dodd Method | 8.14 | -55 |
| Graham Formula | 59.03 | 228 |
Ningbo Dechang Electrical Machinery Manufacturing Co., Ltd. is a prominent Chinese industrial machinery company specializing in the research, development, production, and sale of electric motors and household vacuum cleaners. Founded in 2002 and headquartered in Yuyao, China, the company has established a significant presence both domestically and internationally. Its core product portfolio includes various electric motors, with a specialized focus on EPS (Electric Power Steering) brushless motors for the automotive industry, positioning it within the growing electric vehicle supply chain. Operating in the industrials sector, Ningbo Dechang leverages its manufacturing expertise to serve diverse markets, from consumer appliances to automotive components. The company's integrated business model, encompassing R&D through to sales, allows it to maintain control over quality and innovation. With a market capitalization of approximately 8.3 billion CNY, Ningbo Dechang represents a key player in China's industrial machinery landscape, contributing to the global supply of essential motorized components for everyday and advanced technological applications.
Ningbo Dechang presents a mixed investment profile. On the positive side, the company demonstrates solid profitability with a net income of 411 million CNY on revenue of 4.09 billion CNY, translating to a healthy net margin of approximately 10%. The company maintains a strong balance sheet with substantial cash reserves of 1.26 billion CNY against modest total debt of 201 million CNY, indicating low financial leverage. The beta of 0.66 suggests lower volatility compared to the broader market, which may appeal to risk-averse investors. However, concerning signals include negative free cash flow, as operating cash flow of 255 million CNY was insufficient to cover capital expenditures of 509 million CNY. The dividend yield, based on the provided dividend per share, appears modest. Investors should weigh the company's profitability and strong liquidity position against its significant capital investment requirements and exposure to competitive industrial and consumer markets.
Ningbo Dechang's competitive positioning is defined by its specialization in electric motors, particularly its foray into EPS brushless motors for the automotive sector. This move aligns with global trends towards electrification in transportation, potentially offering a growth vector distinct from its traditional household vacuum cleaner business. The company's integrated model, controlling R&D and production, is a key advantage, allowing for cost control and customization. However, the electric motor industry, especially in China, is highly competitive and fragmented, characterized by thin margins and pressure from both domestic and international players. Ningbo Dechang's scale, with a market cap of ~8.3 billion CNY, is respectable but not dominant when compared to global giants. Its competitive edge likely rests on cost-effective manufacturing, proximity to the vast Chinese market, and its specific expertise in brushless motor technology for automotive applications. The significant capital expenditures suggest an ongoing investment in capacity and technology, which is necessary to keep pace but also highlights the capital-intensive nature of the industry. Its future success will depend on its ability to secure stable contracts, particularly in the evolving automotive supply chain, and to defend its market share in the competitive consumer appliance segment against low-cost producers.