| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 25.79 | -14 |
| Intrinsic value (DCF) | 10.66 | -65 |
| Graham-Dodd Method | 10.95 | -64 |
| Graham Formula | 18.38 | -39 |
Jinan Shengquan Group Share Holding Co., Ltd. is a leading Chinese specialty chemicals manufacturer with a 45-year legacy since its 1979 founding. Headquartered in Zhangqiu, China, the company specializes in the research, development, production, and sale of phenolic resins and composite materials, serving diverse industrial applications including tire rubber, electronics, foundry materials, and friction products. Shengquan has strategically diversified into three core business segments: traditional phenolic resin products, health industry offerings featuring heal fiber and L-arabinose, and new energy solutions including lithium titanate batteries and solar components. The company's vertically integrated operations span from basic chemical production to advanced material applications, positioning it as a key player in China's basic materials sector. With a market capitalization exceeding CNY 26.6 billion, Shengquan leverages its technical expertise to serve global industrial markets while expanding into high-growth areas like renewable energy and healthcare materials. The company's comprehensive product portfolio and manufacturing capabilities make it a significant contributor to China's chemical industry value chain.
Jinan Shengquan presents a mixed investment profile with several positive indicators offset by concerning operational metrics. The company demonstrates solid profitability with CNY 867.9 million net income on CNY 10 billion revenue, translating to a healthy 8.7% net margin. The diluted EPS of CNY 1.05 and dividend per share of CNY 0.55 indicate shareholder-friendly capital allocation. However, significant concerns emerge from the weak operating cash flow of CNY 231 million relative to net income, suggesting potential working capital challenges or aggressive revenue recognition. The substantial capital expenditures of CNY 263.9 million and high beta of 1.377 indicate both growth investment and above-market volatility. The debt level of CNY 1.83 billion against cash reserves of CNY 1.22 billion warrants monitoring, though the current financial position appears manageable. Investors should weigh the company's established market position against its operational efficiency challenges and cyclical exposure to industrial markets.
Jinan Shengquan competes in the highly fragmented phenolic resin and specialty chemicals market, where its competitive advantage stems from four decades of industry experience and vertical integration. The company's positioning is strengthened by its diverse product portfolio spanning traditional phenolic resins, foundry materials, and emerging segments in health and new energy industries. Shengquan's competitive edge lies in its technical expertise in composite materials and its ability to serve multiple industrial applications, providing cross-selling opportunities and revenue diversification. However, the company faces intense competition from both domestic Chinese chemical producers and international specialty chemical giants. Its regional focus in China provides advantages in serving local industrial customers but may limit global market penetration compared to multinational competitors. The expansion into lithium titanate batteries and solar components represents a strategic move to capitalize on China's renewable energy transition, though this segment faces fierce competition from established battery and solar manufacturers. Shengquan's scale in phenolic resins provides cost advantages in raw material procurement and production efficiency, but the company must continuously innovate to maintain its position against technologically advanced competitors. The dual challenge of competing in mature chemical markets while investing in emerging technologies requires careful capital allocation and R&D focus to sustain long-term competitiveness.