Wai Chi Holdings and Shandong Xinhua Pharmaceutical may be trading at prices below their likely values. This suggests that these stocks are undervalued, meaning we can benefit when the stock price moves to its true valuation. Investors can profit from the difference by investing in these stocks as the current market prices should eventually move towards their true values. If capital gains are what you’re after in your next investment, I’ve put together a list of undervalued stocks you may be interested in, based on the latest financial data from each company.
Wai Chi Holdings Company Limited (SEHK:1305)
Wai Chi Holdings Company Limited, an investment holding company, engages in the manufacture and trading of light-emitting diode (LED) backlight and LED lighting products in the People’s Republic of China and internationally. Established in 1984, and run by CEO Chung Po Chen, the company currently employs 2,379 people and with the stock’s market cap sitting at HKD HK$223.33M, it comes under the small-cap group.
1305’s stock is currently hovering at around -73% below its value of $3.88, at a price tag of HK$1.03, based on its expected future cash flows. This difference in price and value gives us a chance to buy low. Also, 1305’s PE ratio is currently around 10x against its its Semiconductor peer level of, 18.37x indicating that relative to its comparable set of companies, you can purchase 1305’s stock for a lower price right now. 1305 is also strong in terms of its financial health, as current assets can cover liabilities in the near term and over the long run. The stock’s debt-to-equity ratio of 50.20% has been falling for the past few years indicating 1305’s ability to reduce its debt obligations year on year. Continue research on Wai Chi Holdings here.
Shandong Xinhua Pharmaceutical Company Limited (SEHK:719)
Shandong Xinhua Pharmaceutical Co., Ltd., through its subsidiaries, develops, manufactures, and sells bulk pharmaceuticals, preparations, and chemical products. Established in 1943, and currently headed by CEO Deping Du, the company currently employs 6,312 people and has a market cap of HKD HK$6.45B, putting it in the mid-cap category.
719’s shares are now hovering at around -38% less than its intrinsic value of ¥12.53, at a price of HK$7.82, according to my discounted cash flow model. The difference between value and price signals a potential opportunity to buy 719 shares at a discount. Also, 719’s PE ratio is trading at 13.05x relative to its Pharmaceuticals peer level of, 19.32x implying that relative to its comparable set of companies, you can purchase 719’s stock for a lower price right now. 719 is also in great financial shape, as short-term assets amply cover upcoming and long-term liabilities. Finally, its debt relative to equity is 47.32%, which has been reducing over time, signifying its capability to reduce its debt obligations year on year. Dig deeper into Shandong Xinhua Pharmaceutical here.
Sisram Medical Ltd (SEHK:1696)
Sisram Medical Ltd, an investment holding company, designs, develops, manufactures, and sells energy-based aesthetic medical and minimally invasive treatment systems worldwide. Started in 2013, and currently run by Lior Dayan, the company currently employs 381 people and with the company’s market cap sitting at HKD HK$2.74B, it falls under the mid-cap category.
1696’s stock is currently hovering at around -56% beneath its intrinsic level of $13.98, at a price tag of HK$6.20, according to my discounted cash flow model. The divergence signals an opportunity to buy 1696 shares at a low price. What’s even more appeal is that 1696’s PE ratio is currently around 20.36x against its its Medical Equipment peer level of, 21.98x indicating that relative to other stocks in the industry, we can invest in 1696 at a lower price. 1696 is also a financially healthy company, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.
Continue research on Sisram Medical here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.