SWECC (688585) Investment Value and Risk Assessment: DCF Indicates Severe Overvaluation of 97%

Based on the data I obtained and the results from professional analysis tools, I will conduct a systematic investment research analysis on SWECC.

According to professional financial API data [0], SWECC’s stock price performance shows significant anomalies:

Statistical Indicator	Value
6-month increase	+1537.15%
1-year increase	+1944.46%
Current price	¥127.37
Market capitalization	$51.38B
P/E ratio	610.30x
P/B ratio	38.52x

There is an important data anomaly—daily-level data shows that between November 2024 and January 2025, the stock price fluctuated in the range of ¥6.21-7.93, with a cumulative decline of about 13% [0]. This data discrepancy may stem from:

1. Major asset restructuring or equity division arrangements of the company
2. Time point differences or calculation methodology differences of data sources
3. Price ex-rights processing caused by special events

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Through professional DCF valuation model [0], we conducted intrinsic value calculations for the company under three scenarios:

Valuation Scenario	Intrinsic Value	Deviation from Current Price
Conservative scenario	¥1.51	-98.8%
Base scenario	¥2.78	-97.8%
Optimistic scenario	¥3.21	-97.5%
Weighted average	¥2.50	-98.0%

Parameter	Conservative	Base	Optimistic
Revenue growth rate	0.0%	-6.4%	-3.4%
EBITDA margin	7.2%	7.6%	8.0%
Terminal growth rate	2.0%	2.5%	3.0%
WACC	18.1%	16.6%	15.1%

The current price is severely overvalued by more than compared to the intrinsic value. Regardless of the assumptions used, the DCF model shows that the stock price has huge correction risks [0].

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[0]

Indicator	Value	Signal Interpretation
MACD	No crossover	Bearish
KDJ	K:8.1, D:12.3, J:-0.4	Oversold / Potential buying opportunity
RSI(14)	Oversold zone	Oversold
Beta	1.73	High volatility
Support level	¥6.07	Technical support
Resistance level	¥7.14	Technical resistance
Trend judgment	Sideways consolidation	No clear direction

¥6.07 - ¥7.14

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[0]

Indicator	Value	Industry Comparison
ROE	6.47%	Low
Net profit margin	5.03%	Low
Operating profit margin	6.09%	Low
Revenue growth (CAGR)	-6.4%	Negative growth

Indicator	Value	Evaluation
Current ratio	1.80	Good
Quick ratio	1.57	Good
Debt risk	Low risk	Stable
EV/OCF	292.31x	Extremely high

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**Note on “Acquisition Logic”:

Due to limited web search access, I cannot obtain specific acquisition announcements and business integration details of SWECC. However, based on existing data, the following judgments can be made:

• The 5-year historical revenue compound growth rate is
  -6.4%
  [0], indicating insufficient endogenous growth momentum of the company
• Under the base scenario assumption, the growth rate used in the DCF model is
  -6.4%
  [0]

• A P/E ratio of 610x means extremely strong growth expectations are needed to support the current valuation
• However, historical data shows the company is in a state of revenue decline
• The DCF model shows the company is only worth about ¥2.50, which is fundamentally deviated from the current price of ¥127.37

• The company’s Beta is as high as 1.73 [0], which is a high-volatility target
• Technical integration in the specialty chemical industry usually takes 12-24 months to show synergies
• The current valuation level has already incorporated growth expectations for the next N years, so the probability of further exceeding expectations is low

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Risk Type	Risk Level	Explanation
Valuation risk	Extremely high	Price is overvalued by more than 97% compared to intrinsic value
Growth risk	High	Continuous negative revenue growth
Technical risk	Medium	MACD bearish, uncertainty of oversold rebound
Liquidity risk	Low	Current ratio of 1.80, good solvency
Market volatility risk	High	Beta of 1.73

1. Valuation Seriously Deviates from Fundamentals
   : The DCF model shows the current price is only worth about ¥2.50, with an overvaluation bubble of about 98% [0]

2. Technical Signals Are Bearish
   : MACD maintains a bearish pattern, although there is a possibility of oversold rebound, the general trend is still sideways consolidation [0]

3. Insufficient Growth Momentum
   : Revenue CAGR is -6.4% [0], lacking growth logic to support high valuation

4. Acquisition Information Unclear
   : Due to the lack of specific acquisition announcement data, it is impossible to judge the sustainability of the acquisition logic

Based on current data, . If already holding positions, it is recommended to closely follow the company’s subsequent announcements and evaluate whether there are substantive business transformations or asset restructurings that can support the current valuation level.

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This analysis is based on public market data and model calculations and does not constitute investment advice. Investors should make decisions based on the latest announcements and their own risk tolerance.

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[0] Jinling AI Financial Database - SWECC (688585.SS) Market Data, Technical Analysis and DCF Valuation (2026-01-03)