Brief Commentary On China Shenhua Energy Company Limited’s (HKG:1088) Fundamentals
Attractive stocks have exceptional fundamentals. In the case of China Shenhua Energy Company Limited (SEHK:1088), there’s is a financially-sound company with a a strong history of performance, trading at a great value. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, read the full report on China Shenhua Energy here.
Excellent balance sheet established dividend payer
Over the past year, 1088 has grown its earnings by 42.15%, with its most recent figure exceeding its annual average over the past five years. Not only did 1088 outperformed its past performance, its growth also exceeded the Oil and Gas industry expansion, which generated a 35.00% earnings growth. This paints a buoyant picture for the company. 1088 is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that 1088 manages its cash and cost levels well, which is an important determinant of the company’s health. 1088’s has produced operating cash levels of 0.87x total debt over the past year, which implies that 1088’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
1088’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of 1088’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the oil and gas industry, 1088 is also trading below its peers, relative to earnings generated. This further reaffirms that 1088 is potentially undervalued.
Next Steps:
For China Shenhua Energy, I’ve compiled three fundamental factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for 1088’s future growth? Take a look at our free research report of analyst consensus for 1088’s outlook.
Dividend Income vs Capital Gains: Does 1088 return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from 1088 as an investment.
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 1088? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
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.
