Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on Sichuan Energy Investment Development Co., Ltd. (HKG:1713) due to its excellent fundamentals in more than one area. 1713 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 understanding where the figures come from and want to see the analysis, take a look at the report on Sichuan Energy Investment Development here.
Undervalued with excellent balance sheet
1713's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. 1713's has produced operating cash levels of 0.42x total debt over the past year, which implies that 1713's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings. 1713's shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. Investors have the opportunity to buy into the stock to reap capital gains, if 1713's projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the electric utilities industry, 1713 is also trading below its peers, relative to earnings generated. This further reaffirms that 1713 is potentially undervalued.
For Sichuan Energy Investment Development, I've compiled three relevant aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for 1713’s future growth? Take a look at our free research report of analyst consensus for 1713’s outlook.
- Historical Performance: What has 1713'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.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 1713? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at email@example.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.