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Why I Like Angang Steel Company Limited (HKG:347)

Kelly Murphy

Angang Steel Company Limited (HKG:347) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of 347, it is a financially-sound company with a a strong history of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my high-level commentary, take a look at the report on Angang Steel here.

Undervalued with solid track record

347 delivered a bottom-line expansion of 85.64% in the prior year, with its most recent earnings level surpassing its average level over the last five years. Not only did 347 outperformed its past performance, its growth also surpassed the Metals and Mining industry expansion, which generated a 57.82% earnings growth. This is an notable feat for the company. 347’s has produced operating cash levels of 0.23x total debt over the past year, which implies that 347’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings. Debt funding requires timely payments on interest to lenders. 347’s earnings sufficiently covered its interest in the prior year, which indicates there’s low risk associated with the company not being able to meet these key expenses.

SEHK:347 Income Statement June 25th 18

347’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. 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, 347’s share price is trading below the group’s average. This supports the theory that 347 is potentially underpriced.

SEHK:347 Intrinsic Value June 25th 18

Next Steps:

For Angang Steel, I’ve put together three key factors you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for 347’s future growth? Take a look at our free research report of analyst consensus for 347’s outlook.
  2. Dividend Income vs Capital Gains: Does 347 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 347 as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 347? 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 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.