Chung Hwa Chemical Industrial Works Ltd. (1727) AI Stock Analysis

Chung Hwa Chemical Industrial Works Ltd.

(TWSE:1727)

Select Model

Rating:39Underperform

Price Target:TWD 73.00▼(-13.20% Downside)

Action:initiatedcoverage

Date:11/09/26

Chung Hwa Chemical scores poorly, driven primarily by severe fundamental deterioration: margin compression has reduced operating profit to near zero, return on equity has fallen to 0.24%, and a large capital spending program pushed free cash flow to negative NT$458.2 million while debt nearly doubled. Technicals reinforce the caution, with the stock trading well below its short- and medium-term moving averages and negative MACD momentum, though oversold readings hint at potential near-term stabilisation. A P/E above 114 and a negligible dividend yield add valuation risk. The principal buffers are a still-conservative balance sheet with equity funding about 60% of assets and cash generation that continues to exceed reported profits — leaving the investment case dependent on the current investment cycle restoring margins and volumes.

Positive Factors

Industrial Chemical PositioningThe company serves downstream manufacturers with chemical intermediates, materials, and processing aids, giving it an established role in industrial production chains. This business positioning can support continued customer relevance across multiple manufacturing applications over the coming quarters.

Negative Factors

Sharp Profitability DeteriorationThe combination of declining revenue and a sharp net-margin contraction materially weakens earnings quality. With operating profit nearly breakeven, even modest changes in sales or costs could have an outsized effect on profits over the next several quarters.

Chung Hwa Chemical Industrial Works Ltd. (1727) vs. SPDR S&P 500 ETF (SPY)

Market Cap: TWD 11.67B
Dividend Yield: 0.18%
Average Volume (3M): 8.41M
Price to Earnings (P/E): 121.5
Beta (1Y): 1.06
Revenue Growth: 20.16%
EPS Growth: 962.24%
Country: TW
Employees: 298
Sector: General
Sector Strength: 55
Industry: Chemicals

Chung Hwa Chemical Industrial Works Ltd. Business Overview & Revenue Model

Company Description

Chung Hwa Chemical Industrial Works, Ltd., established in Taoyuan City, Taiwan, in 1956, is a global enterprise engaged in the manufacturing and distribution of various chemical products. The company's offerings encompass essential industrial chemica...

Chung Hwa Chemical Industrial Works Ltd. Financial Statement Overview

Summary

Financials are weak across the board. Revenue slipped to about NT$1.97 billion with no real growth over five years, while gross margin compressed to 9.5% from 13.0% and operating profit collapsed to a near break-even NT$1.0 million, leaving a 0.26% net margin. Operating cash flow fell sharply to NT$110.3 million from NT$351.6 million, and heavy capital spending drove free cash flow to negative NT$458.2 million, funded by debt that nearly doubled to NT$979.5 million. The main offsets are a still-conservative capital structure (equity funds about 60% of assets, debt-to-equity 0.47), healthy EBITDA near 12% of sales, and operating cash flow that comfortably exceeds reported profit — but return on equity of just 0.24% leaves almost no margin for error.

Income Statement

27Negative

Balance Sheet

54Neutral

Cash Flow

33Negative

Financial statement breakdown
Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.16B	1.97B	2.08B	1.72B	2.31B	2.01B
Gross Profit	294.60M	186.25M	270.46M	192.71M	281.95M	372.60M
EBITDA	336.97M	236.31M	311.65M	223.59M	269.27M	356.95M
Net Income	88.17M	5.11M	63.13M	43.73M	46.90M	134.25M
Balance Sheet
Total Assets	3.80B	3.51B	3.04B	2.85B	2.85B	2.59B
Cash, Cash Equivalents and Short-Term Investments	170.34M	126.37M	145.54M	209.12M	261.67M	202.39M
Total Debt	1.24B	979.50M	530.39M	652.22M	807.07M	611.60M
Total Liabilities	1.64B	1.42B	963.50M	1.01B	1.28B	1.11B
Stockholders Equity	2.16B	2.09B	2.07B	1.84B	1.57B	1.47B
Cash Flow
Free Cash Flow	-488.16M	-458.24M	-86.58M	-57.20M	-137.88M	126.50M
Operating Cash Flow	127.68M	110.34M	351.56M	235.02M	338.14M	333.82M
Investing Cash Flow	-625.36M	-580.11M	-449.68M	-314.59M	-474.02M	-122.77M
Financing Cash Flow	562.28M	450.61M	34.53M	28.04M	191.52M	-64.29M

Chung Hwa Chemical Industrial Works Ltd. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (55)

Financial Indicators

TW:1727 against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TW:6509	69Neutral	TWD 9.02B	12.96	―	3.23%	2.00%	57.23%
TW:1708	65Neutral	TWD 11.22B	11.02	―	3.52%	3.55%	34.35%
TW:4764	59Neutral	TWD 11.49B	42.72	―	0.76%	17.96%	211.40%
TW:4755	58Neutral	TWD 12.34B	27.45	―	3.05%	-11.09%	37.46%
Sector *	55Neutral	$6.65B	3.83	-15.92%	6.20%	10.91%	7.18%
TW:4707	45Neutral	TWD 11.15B	21.39	―	0.92%	-9.16%	67.21%
TW:1727	39Underperform	TWD 11.75B	121.53	―	0.18%	20.16%	962.24%

* General Sector Average

Performance Comparison

TW:1727 and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
TW:1727	Chung Hwa Chemical Industrial Works Ltd.	84.10	47.51	129.83%
TW:1708	Sesoda Corporation	45.40	14.45	46.66%
TW:4707	Pan Asia Chemical Corp.	27.30	17.85	188.80%
TW:4755	San Fu Chemical Co., Ltd.	121.50	17.34	16.65%
TW:4764	Double Bond Chemical Ind., Co., Ltd.	131.00	63.18	93.16%
TW:6509	Taiwan Hopax Chemicals Manufacturing Co. Ltd.	43.20	10.94	33.93%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.

Date of analysis: Nov 09, 2026

Chung Hwa Chemical Industrial Works Ltd. AI Stock Analysis