Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Nine Dragons Paper (Holdings) Limited (HKG:2689) due to its excellent fundamentals in more than one area. 2689 is a financially-healthy company with a strong history high-grade dividend payments, trading at a discount. Below, I've touched on some key aspects you should know on a high level. For those interested in digging a bit deeper into my commentary, read the full report on Nine Dragons Paper (Holdings) here.
Undervalued with excellent balance sheet and pays a dividend
2689's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. 2689's has produced operating cash levels of 0.28x total debt over the past year, which implies that 2689's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings. 2689's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. 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. Also, relative to the rest of its peers with similar levels of earnings, 2689's share price is trading below the group's average. This supports the theory that 2689 is potentially underpriced.
For those seeking income streams from their portfolio, 2689 is a robust dividend payer as well. Over the past decade, the company has consistently increased its dividend payout, reaching a yield of 9.6%, making it one of the best dividend companies in the market.
For Nine Dragons Paper (Holdings), I've compiled three essential aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for 2689’s future growth? Take a look at our free research report of analyst consensus for 2689’s outlook.
- Historical Performance: What has 2689'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.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 2689? 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 firstname.lastname@example.org. 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.