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Sinosoft Technology Group Limited (HKG:1297): Commentary On Fundamentals

Simply Wall St

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 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. For those interested in digging a bit deeper into my commentary, read the full report on Sinosoft Technology Group here.

Undervalued with excellent balance sheet

1297 is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that 1297 manages its cash and cost levels well, which is a key determinant of the company’s health. 1297 seems to have put its debt to good use, generating operating cash levels of 7.6x 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. 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. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of 1297's earnings, investors now have the opportunity to buy into the stock to reap capital gains. 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.

SEHK:1297 Intrinsic value, September 18th 2019

Next Steps:

For Sinosoft Technology Group, there are three relevant aspects you should further research:

  1. 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.
  2. Historical Performance: What has 1297'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 1297? 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.