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An Examination Of China Aoyuan Group Limited (HKG:3883)

Simply Wall St

Attractive stocks have exceptional fundamentals. In the case of China Aoyuan Group Limited (HKG:3883), there's has a an impressive track record of performance and an optimistic growth outlook not yet reflected in the share price. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, take a look at the report on China Aoyuan Group here.

Exceptional growth potential and good value

One reason why investors are attracted to 3883 is its notable earnings growth potential in the near future of 34%. Earnings growth is paired with an eye-catching top-line trajectory also doubling over the same period, which indicates a high-quality bottom-line expansion, as opposed to those driven by unsustainable cost-cutting activities. Over the past year, 3883 has grown its earnings by 65%, with its most recent figure exceeding its annual average over the past five years. In addition to beating its historical values, 3883 also outperformed its industry, which delivered a growth of -12%. This paints a buoyant picture for the company.

SEHK:3883 Past and Future Earnings, September 23rd 2019

3883 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 3883's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the market, 3883 is also trading below other listed companies on the HK stock exchange, relative to earnings generated. This bolsters the proposition that 3883's price is currently discounted.

SEHK:3883 Price Estimation Relative to Market, September 23rd 2019

Next Steps:

For China Aoyuan Group, I've put together three key aspects you should look at:

  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 3883 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 3883 as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 3883? 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.