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Why I Like Dongguang Chemical Limited (HKG:1702)

Simply Wall St

Dongguang Chemical Limited (HKG:1702) 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 1702, it is a company with a great history of performance, trading at a great value. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, take a look at the report on Dongguang Chemical here.

Good value with proven track record

Over the past year, 1702 has grown its earnings by 88%, with its most recent figure exceeding its annual average over the past five years. Not only did 1702 outperformed its past performance, its growth also exceeded the Chemicals industry expansion, which generated a 18% earnings growth. This is what investors like to see! 1702 is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. 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, 1702's share price is trading below the group's average. This further reaffirms that 1702 is potentially undervalued.

SEHK:1702 Income Statement, September 15th 2019

Next Steps:

For Dongguang Chemical, I've compiled three pertinent aspects you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for 1702’s future growth? Take a look at our free research report of analyst consensus for 1702’s outlook.
  2. Financial Health: Are 1702’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 1702? 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.