Value-Adding Discounted Stocks To Buy Now
Undervalued companies are those that trade at a price lower than their actual values, such as Shanghai Industrial Holdings and BBMG. Investors can determine how much a company is worth based on how much money they are expected to make in the future, or compared to the value of their peers. The list I’ve put together below are of stocks that compare favourably on all criteria, which potentially makes them good investments if you believe the price should eventually reflect the stock’s actual value.
Shanghai Industrial Holdings Limited (SEHK:363)
Shanghai Industrial Holdings Limited, an investment holding company, engages in the infrastructure facilities, real estate, and consumer products businesses in Hong Kong and the People’s Republic of China. Established in 1996, and run by CEO Jun Zhou, the company provides employment to 18,176 people and with the company’s market capitalisation at HKD HK$23.38B, we can put it in the large-cap group.
363’s shares are now hovering at around -20% lower than its intrinsic level of $27, at the market price of $21.5, based on its expected future cash flows. The divergence signals an opportunity to buy 363 shares at a low price. Also, 363’s PE ratio stands at around 7.8x relative to its industrials peer level of 10x, indicating that relative to its peers, we can purchase 363’s shares for cheaper. 363 is also strong in terms of its financial health, as current assets can cover liabilities in the near term and over the long run. It’s debt-to-equity ratio of 76% has been reducing over time, signalling 363’s capacity to reduce its debt obligations year on year. More detail on Shanghai Industrial Holdings here.
BBMG Corporation (SEHK:2009)
BBMG Corporation engages in cement and ready-mixed concrete, building materials, commerce, and logistics; and property development, investment, and management businesses primarily in the People’s Republic of China. Formed in 2005, and currently run by Jin Zeng, the company currently employs 49,721 people and with the company’s market capitalisation at HKD HK$59.61B, we can put it in the large-cap group.
2009’s stock is now hovering at around -33% under its intrinsic level of ¥5.15, at the market price of ¥3.46, based on my discounted cash flow model. The discrepancy signals an opportunity to buy low. Moreover, 2009’s PE ratio is trading at 10x against its its basic materials peer level of 14.2x, implying that relative to its comparable set of companies, 2009’s shares can be purchased for a lower price. 2009 is also in good financial health, with short-term assets covering liabilities in the near future as well as in the long run.
Dig deeper into BBMG here.
Yuzhou Properties Company Limited (SEHK:1628)
Yuzhou Properties Company Limited, an investment holding company, engages in the investment, development, and management of real estate properties. Founded in 1994, and now led by CEO Lung On Lam , the company now has 3,805 employees and has a market cap of HKD HK$21.09B, putting it in the large-cap category.
1628’s shares are now hovering at around -53% below its actual worth of ¥10.61, at a price tag of ¥5.04, based on my discounted cash flow model. This mismatch indicates a chance to invest in 1628 at a discounted price. In addition to this, 1628’s PE ratio stands at around 8.3x while its real estate peer level trades at 9.1x, indicating that relative to its comparable set of companies, 1628’s stock can be bought at a cheaper price. 1628 is also robust in terms of financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.
More detail on Yuzhou Properties here.
For more financially sound, undervalued companies to add to your portfolio, you can use our free platform to explore our interactive list of undervalued stocks.
To help readers see pass 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.
