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Brief Commentary On DaFa Properties Group Limited's (HKG:6111) Fundamentals

Simply Wall St

Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on DaFa Properties Group Limited (HKG:6111) due to its excellent fundamentals in more than one area. 6111 has a an impressive track record of performance and an optimistic future outlook not yet factored into the price. 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, take a look at the report on DaFa Properties Group here.

Exceptional growth potential and undervalued

Investors in search for stocks with room to flourish should look no further than 6111, with its expected earnings growth of 28%. The optimistic bottom-line growth is supported by an outstanding revenue growth of 74% over the same time period, which indicates that earnings is driven by top-line activity rather than purely unsustainable cost-reduction initiatives. 6111 delivered a triple-digit bottom-line expansion over the past couple of years, with its most recent earnings level surpassing its average level over the last five years. In addition to beating its historical values, 6111 also outperformed its industry, which delivered a growth of -13%. This paints a buoyant picture for the company.

SEHK:6111 Past and Future Earnings, October 1st 2019

6111 is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. Investors have the opportunity to buy into the stock to reap capital gains, if 6111's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the real estate industry, 6111 is also trading below its peers, relative to earnings generated. This supports the theory that 6111 is potentially underpriced.

SEHK:6111 Price Estimation Relative to Market, October 1st 2019

Next Steps:

For DaFa Properties Group, I've put together three important factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Dividend Income vs Capital Gains: Does 6111 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 6111 as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 6111? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.