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Why China Lesso Group Holdings Limited (HKG:2128) Could Have A Place In Your Portfolio

Simply Wall St

Attractive stocks have exceptional fundamentals. In the case of China Lesso Group Holdings Limited (HKG:2128), there's 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. If you're interested in understanding beyond my broad commentary, read the full report on China Lesso Group Holdings here.

Good value with adequate balance sheet

2128'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 indicates that 2128 has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. 2128 seems to have put its debt to good use, generating operating cash levels of 0.35x 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. 2128'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 2128's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the market, 2128 is also trading below other listed companies on the HK stock exchange, relative to earnings generated. This supports the theory that 2128 is potentially underpriced.

SEHK:2128 Intrinsic value, September 17th 2019

Next Steps:

For China Lesso Group Holdings, I've compiled three important factors you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for 2128’s future growth? Take a look at our free research report of analyst consensus for 2128’s outlook.
  2. Historical Performance: What has 2128'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 2128? 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.