# Shandong Hualu Hengsheng Chemical (600426.SHG)

Canonical: https://gigainvestors.com/s/600426.SHG

Analysis as of: 2026-10-01T09:06:00.325Z. Financial observations: FY1999–FY2025.

Listing currency: CNY. Reporting currency: CNY.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed. Published buy qualification: no.

Share price: CNY 18.37 per share; close as of 2026-10-15.

Estimated value: low CNY 14.59 per share, central CNY 20.62 per share, high CNY 24.13 per share. Buy at or below the central value CNY 20.62 per share. Valuation as of 2026-10-01T09:06:00.325Z; scenarios are not confidence intervals.

Expected annual return: 10.8% at the stated quote. About 10.8% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; CN 10-year bond 1.7% + 4 points).

## Checklist

### understandable: pass

- 5 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 5

- Years with a net loss: 0

- Operating margin variation: 0.31×

Chart: Operating margin; fiscal year observations.

- FY2016: 0.13×

- FY2017: 0.14×

- FY2018: 0.25×

- FY2019: 0.20×

- FY2020: 0.16×

- FY2021: 0.32×

- FY2022: 0.25×

- FY2023: 0.16×

- FY2024: 0.15×

- FY2025: 0.15×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- ROIC, median of available years: 11.2%

- ROIC, second-lowest year: 9.2%

- Typical minus recent gross margin: 3.8 pp

- Years with nonpositive capital: 0

- Capital spending / revenue: 15.6%

- ROIC including acquisitions, ten-year median: 9.5%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: 7.7%

- FY2017: 9.2%

- FY2018: 20.2%

- FY2019: 16.8%

- FY2020: 11.4%

- FY2021: 33.4%

- FY2022: 23.5%

- FY2023: 10.9%

- FY2024: 11.0%

- FY2025: 9.8%

### economics: fail

- owner earnings cash conversion below threshold

- Owner earnings / net income, 5-yr: 0.61×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: CNY 15B

- Net income, five-year total: CNY 24B

- Return on incremental invested capital: 14.8%

- Working capital / revenue, annual change: 0.1 pp

- Working capital / revenue, change between three-year averages: -0.5 pp

- Working capital / revenue, final three-year average: 1.5%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 1.00×

- FY2022: 0.64×

- FY2023: -0.93×

- FY2024: 1.00×

- FY2025: 0.86×

### management: pass

- $1 retained earnings test: 2016 to 2025 (9 years)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: 9.2% vs 10.9%

- Market cap gain: CNY 39B

- Cumulative retained earnings: CNY 24B

- Diluted shares, 10-year annual growth: 0.1%

- Diluted shares, 5-year annual growth: -0.0%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value growth: 18.6%

- Per-share value change: CNY 1.26

- Per-share value, starting three-year median: CNY 0.43

- Per-share value, ending three-year median: CNY 1.69

- Buybacks concentrated in cheaper years (correlation): -0.49

- Average buyback yield: 0.1%

- Buyback history: 6 years

- Debt-funded buybacks: No

- Acquisition spending: CNY 2.5B

- Cumulative net income, 10 years: CNY 34B

- ROIC, first three-year median: 9.2%

- ROIC, last three-year median: 10.9%

### accounting: pass

- Sloan accruals: -1.8%

- Receivables to sales index (DSRI): 0.02×

- Restructuring years, last five: 0

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.27×

- Accounting red flags: 0

- Goodwill and intangibles / equity: 0.09×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -0.9%

- FY2017: -3.1%

- FY2018: -4.9%

- FY2019: -7.1%

- FY2020: -5.8%

- FY2021: 8.3%

- FY2022: -2.0%

- FY2023: -2.6%

- FY2024: -2.3%

- FY2025: -1.8%

## Holders

## Price story

Down 35% since Feb 2026 · sales -9.5%

Story as of 2026-10-03T17:10:00Z; price observation 2026-09-30.

Price needs cash profits to grow 5.7% a year for ten years

### Sales · FY2024–2025

sales -9.5%; source https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/; observed 2026-10-01.

- FY2016: CNY 7.7B 

- FY2017: CNY 10B 

- FY2018: CNY 14B 

- FY2019: CNY 14B 

- FY2020: CNY 13B 

- FY2021: CNY 27B 

- FY2022: CNY 30B 

- FY2023: CNY 27B 

- FY2024: CNY 34B 

- FY2025: CNY 31B 

### Gross margin · FY2025

gross margin 19.2%; source https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/; observed 2026-10-01.

- FY2016: 20.2% 

- FY2017: 19.5% 

- FY2018: 30.3% 

- FY2019: 27.8% 

- FY2020: 21.3% 

- FY2021: 35.2% 

- FY2022: 28.9% 

- FY2023: 20.7% 

- FY2024: 18.6% 

- FY2025: 19.2% 

## Owner memo

Memo as of 2026-10-02T06:52:09.009Z.

### How it makes money

Operates in chemicals; annual sales are CNY 31 billion.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); FY2025: revenue 30968875947.12; grossProfit 5932190991.52; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-02); 600426.SHG: Shandong Hualu-Hengsheng Chemical Co., Ltd. manufactures and sells chemical products and raw materials worldwide. The company provides granular urea, power plant grade ammonium sulfate, caprolactam grade ammonium sulfate, and ammonium bicarbonate for agricultural use; and dimethyl carbonate, methyl ethyl carbonate, diethyl carbonate, and oxalic acid. It also offers glossy nylon 6 slices, caprolactam, adipic acid, melamine, N-butanol, isooctanol, N-butyraldehyde, isobutyraldehyde, ethylene glycol; dimethylformamide, monomethylamine, dimethylamine, trimethylamine, acetic acid, acetic anhydride, and methanol; autoclaved fly ash brick; nitrous oxide; and mixed diacids products. In addition, the company provides industrialization services, such as development planning, engineering design, project management, and equipment manufacturing. Shandong Hualu-Hengsheng Chemical Co., Ltd. was founded in 2000 and is based in Dezhou, China.

### Why customers stay

Margins ranged from 18.6% to 20.7% during 2023–25; it earns 11.2% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); FY2023: grossProfit / revenue = 20.7%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); FY2024: grossProfit / revenue = 18.6%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); FY2025: grossProfit / revenue = 19.2%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); 10-year return on capital observations [[2016,0.07650183640606713],[2017,0.09210293128167579],[2018,0.20167999211104884],[2019,0.16768351315849367],[2020,0.11388900260746211],[2021,0.33354931237576296],[2022,0.23533632980095567],[2023,0.10889938427827647],[2024,0.11012533125957089],[2025,0.09825106529907494]]; median 0.1120071669335165. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Paid dividends in 10 of 10 years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); FY2016: growth capex 0; upkeep 1263973953.2; owner earnings 546035747.8. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); FY2017: growth capex 1189766496.88; upkeep 970984131; owner earnings 1222051799. Growth capex / owner earnings = 0.973581069029628.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); FY2018: growth capex 79389652.5999999; upkeep 1207959293; owner earnings 3019652962. Growth capex / owner earnings = 0.026290985619558723.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); FY2019: growth capex 0; upkeep 1855565655.42; owner earnings 1883347602.58. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); FY2020: growth capex 0; upkeep 2615755306.53; owner earnings 481141508.4699998. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); FY2021: growth capex 2264524952.91; upkeep 1407864003; owner earnings 7268960402.828. Growth capex / owner earnings = 0.3115335381423983.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); FY2022: growth capex 2976129479.831922; upkeep 3994005943.6480775; owner earnings 4055942002.1179223. Growth capex / owner earnings = 0.7337702260727234.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); FY2024: growth capex 2333287433; upkeep 2747428407; owner earnings 3893276137.876. Growth capex / owner earnings = 0.5993120832864783.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); FY2025: growth capex 0; upkeep 3649994293.98; owner earnings 2844224700.7679996. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); Dividend observations: [[2016,268678574],[2017,343817257],[2018,476673736],[2019,325331950],[2020,568170412],[2021,487364925],[2022,1697984000],[2023,1698656000],[2024,2202930893],[2025,1477552940.23]]. Zero only counted when supported by a complete cash-flow statement.

### Are managers owners

Insiders own 32.4% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-02); 600426.SHG SharesStats.PercentInsiders = 32.374 percentage points; cache date 2026-10-02.

### What the price says

The price assumes cash profits grow 5.7% yearly over ten years; actual growth was 8.6%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-01T09:06:00.325Z); Ten-year compound average after fade. Initial solved rate 0.06894046040103496. Price 19.43; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2015 owner earnings/share 0.5878951502627343 → FY2025 1.3421367057224018. Closing-price date 2026-09-30.

## Monthly share-price history (CNY per share)

- 2016-10: CNY 5.24 per share

- 2016-11: CNY 5.23 per share

- 2016-12: CNY 6.03 per share

- 2017-01: CNY 6.04 per share

- 2017-02: CNY 6.25 per share

- 2017-03: CNY 6.06 per share

- 2017-04: CNY 6.04 per share

- 2017-05: CNY 6.23 per share

- 2017-06: CNY 6.95 per share

- 2017-07: CNY 7.28 per share

- 2017-08: CNY 6.61 per share

- 2017-09: CNY 7.56 per share

- 2017-10: CNY 7.75 per share

- 2017-11: CNY 7.67 per share

- 2017-12: CNY 9.42 per share

- 2018-01: CNY 10.93 per share

- 2018-02: CNY 10.72 per share

- 2018-03: CNY 9.40 per share

- 2018-04: CNY 10.11 per share

- 2018-05: CNY 11.73 per share

- 2018-06: CNY 10.41 per share

- 2018-07: CNY 11.33 per share

- 2018-08: CNY 10.14 per share

- 2018-09: CNY 10.18 per share

- 2018-10: CNY 8.28 per share

- 2018-11: CNY 7.49 per share

- 2018-12: CNY 7.14 per share

- 2019-01: CNY 7.30 per share

- 2019-02: CNY 8.41 per share

- 2019-03: CNY 9.05 per share

- 2019-04: CNY 9.12 per share

- 2019-05: CNY 8.47 per share

- 2019-06: CNY 8.79 per share

- 2019-07: CNY 9.23 per share

- 2019-08: CNY 9.89 per share

- 2019-09: CNY 9.72 per share

- 2019-10: CNY 9.23 per share

- 2019-11: CNY 9.88 per share

- 2019-12: CNY 11.76 per share

- 2020-01: CNY 10.78 per share

- 2020-02: CNY 9.99 per share

- 2020-03: CNY 9.29 per share

- 2020-04: CNY 9.84 per share

- 2020-05: CNY 10.47 per share

- 2020-06: CNY 10.46 per share

- 2020-07: CNY 13.69 per share

- 2020-08: CNY 15.91 per share

- 2020-09: CNY 14.50 per share

- 2020-10: CNY 16.73 per share

- 2020-11: CNY 20.77 per share

- 2020-12: CNY 22.07 per share

- 2021-01: CNY 23.09 per share

- 2021-02: CNY 25.19 per share

- 2021-03: CNY 22.22 per share

- 2021-04: CNY 23.08 per share

- 2021-05: CNY 21.58 per share

- 2021-06: CNY 23.81 per share

- 2021-07: CNY 23.78 per share

- 2021-08: CNY 28.02 per share

- 2021-09: CNY 25.33 per share

- 2021-10: CNY 23.91 per share

- 2021-11: CNY 22.62 per share

- 2021-12: CNY 24.08 per share

- 2022-01: CNY 23.24 per share

- 2022-02: CNY 27.05 per share

- 2022-03: CNY 25.05 per share

- 2022-04: CNY 23.23 per share

- 2022-05: CNY 22.95 per share

- 2022-06: CNY 22.46 per share

- 2022-07: CNY 21.95 per share

- 2022-08: CNY 22.44 per share

- 2022-09: CNY 22.44 per share

- 2022-10: CNY 20.14 per share

- 2022-11: CNY 25.62 per share

- 2022-12: CNY 25.50 per share

- 2023-01: CNY 26.02 per share

- 2023-02: CNY 27.79 per share

- 2023-03: CNY 27.12 per share

- 2023-04: CNY 24.52 per share

- 2023-05: CNY 22.44 per share

- 2023-06: CNY 23.56 per share

- 2023-07: CNY 26.02 per share

- 2023-08: CNY 25.46 per share

- 2023-09: CNY 24.69 per share

- 2023-10: CNY 24.75 per share

- 2023-11: CNY 22.96 per share

- 2023-12: CNY 21.22 per share

- 2024-01: CNY 18.75 per share

- 2024-02: CNY 21.15 per share

- 2024-03: CNY 20.12 per share

- 2024-04: CNY 22.92 per share

- 2024-05: CNY 22.10 per share

- 2024-06: CNY 20.49 per share

- 2024-07: CNY 19.12 per share

- 2024-08: CNY 17.58 per share

- 2024-09: CNY 20.15 per share

- 2024-10: CNY 17.63 per share

- 2024-11: CNY 16.95 per share

- 2024-12: CNY 16.62 per share

- 2025-01: CNY 16.14 per share

- 2025-02: CNY 15.81 per share

- 2025-03: CNY 17.00 per share

- 2025-04: CNY 15.68 per share

- 2025-05: CNY 16.02 per share

- 2025-06: CNY 16.67 per share

- 2025-07: CNY 18.45 per share

- 2025-08: CNY 21.10 per share

- 2025-09: CNY 20.47 per share

- 2025-10: CNY 19.75 per share

- 2025-11: CNY 21.75 per share

- 2025-12: CNY 24.18 per share

- 2026-01: CNY 28.85 per share

- 2026-02: CNY 29.69 per share

- 2026-03: CNY 27.85 per share

- 2026-04: CNY 29.62 per share

- 2026-05: CNY 22.64 per share

- 2026-06: CNY 18.40 per share

- 2026-07: CNY 21.55 per share

- 2026-08: CNY 21.45 per share

- 2026-09: CNY 19.05 per share

## Annual estimated value (CNY per share)

- FY2016: low CNY 3.05 per share, central CNY 3.44 per share, high CNY 3.96 per share

- FY2017: low CNY 5.43 per share, central CNY 7.65 per share, high CNY 8.94 per share

- FY2018: low CNY 8.35 per share, central CNY 11.73 per share, high CNY 13.70 per share

- FY2019: low CNY 8.74 per share, central CNY 12.14 per share, high CNY 14.12 per share

- FY2020: low CNY 3.62 per share, central CNY 4.38 per share, high CNY 4.98 per share

- FY2021: low CNY 13.22 per share, central CNY 18.41 per share, high CNY 21.43 per share

- FY2022: low CNY 20.71 per share, central CNY 29.05 per share, high CNY 33.91 per share

- FY2024: low CNY 25.36 per share, central CNY 36.08 per share, high CNY 42.32 per share

- FY2025: low CNY 18.94 per share, central CNY 26.76 per share, high CNY 31.31 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.