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Is Brilliant Circle Holdings International Limited (HKG:1008) Potentially Underrated?

Simply Wall St

Brilliant Circle Holdings International Limited (HKG:1008) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of 1008, it is a company that has been able to sustain great financial health, trading at an attractive share price. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, read the full report on Brilliant Circle Holdings International here.

Flawless balance sheet and undervalued

1008's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that 1008 manages its cash and cost levels well, which is a key determinant of the company’s health. 1008 seems to have put its debt to good use, generating operating cash levels of 0.49x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows. 1008's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts' consensus forecast growth be correct. Compared to the rest of the commercial services industry, 1008 is also trading below its peers, relative to earnings generated. This further reaffirms that 1008 is potentially undervalued.

SEHK:1008 Price Estimation Relative to Market, August 7th 2019

Next Steps:

For Brilliant Circle Holdings International, I've put together three essential aspects you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for 1008’s future growth? Take a look at our free research report of analyst consensus for 1008’s outlook.
  2. Historical Performance: What has 1008's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 1008? 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.