Sinosoft Technology Group Limited (HKG:1297) 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 1297, it is a financially-healthy company with a a great track record of performance, trading at a great value. Below, I’ve touched on some key aspects you should know on a high level. If you’re interested in understanding beyond my high-level commentary, take a look at the report on Sinosoft Technology Group here.
Flawless balance sheet with solid track record
In the previous year, 1297 has ramped up its bottom line by 22%, with its latest earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 20%, which is an notable feat for the company. 1297 is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that 1297 has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. 1297’s has produced operating cash levels of 2.97x total debt over the past year, which implies that 1297’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
1297’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. Investors have the opportunity to buy into the stock to reap capital gains, if 1297’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the software industry, 1297 is also trading below its peers, relative to earnings generated. This further reaffirms that 1297 is potentially undervalued.
For Sinosoft Technology Group, there are three relevant factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for 1297’s future growth? Take a look at our free research report of analyst consensus for 1297’s outlook.
- Dividend Income vs Capital Gains: Does 1297 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 1297 as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 1297? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.