Is China Gas Holdings Limited (HKG:384) Potentially Underrated?
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China Gas Holdings Limited (HKG:384) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of 384, it is a financially-robust company with a strong track record and a buoyant growth outlook. Below is a brief commentary on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at the report on China Gas Holdings here.
Solid track record with reasonable growth potential and pays a dividend
384’s cash-generating ability is outstanding, with analysts expecting its operating cash flows to more than double in the upcoming year. This underlies the notable 22% return on equity over the next few years leading up to 2022. Over the past few years, 384 has demonstrated a proven ability to generate robust returns of 22% Not surprisingly, 384 outperformed its industry which returned 11%, giving us more conviction of the company's capacity to drive bottom-line growth going forward.
384's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This implies that 384 manages its cash and cost levels well, which is a crucial insight into the health of the company. 384’s earnings amply cover its interest expense. Paying interest on time and in full can help the company get favourable debt terms in the future, leading to lower cost of debt and helps 384 expand.
Next Steps:
For China Gas Holdings, I've compiled three key factors you should further research:
Valuation: What is 384 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 384 is currently mispriced by the market.
Dividend Income vs Capital Gains: Does 384 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 384 as an investment.
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 384? 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.
