Companies that are recently trading at a market price lower than their real values include Jiahua Stores Holdings and China Starch Holdings. There’s a few ways you can value a company. The most popular methods include discounting the company’s cash flows it is expected to create in the future, or comparing its price to its peers or the value of its assets. Analysing the most recent financial data, I’ve created a list of companies that compare favourably in all criteria, making them potentially good investments.
Jiahua Stores Holdings Limited (SEHK:602)
Jiahua Stores Holdings Limited, an investment holding company, operates and manages retail stores and other related businesses in the People’s Republic of China. Formed in 1995, and currently lead by Xiao Xiong Zhuang, the company employs 1,360 people and with the company’s market capitalisation at HKD HK$404.63M, we can put it in the small-cap stocks category.
602’s stock is currently hovering at around -45% less than its true value of ¥0.71, at the market price of HK$0.39, according to my discounted cash flow model. The mismatch signals a potential chance to invest in 602 at a discounted price. Moreover, 602’s PE ratio is around 8.07x compared to its Consumer Retailing peer level of, 15.03x indicating that relative to its comparable company group, we can invest in 602 at a lower price. 602 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. 602 also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. Continue research on Jiahua Stores Holdings here.
China Starch Holdings Limited (SEHK:3838)
China Starch Holdings Limited, an investment holding company, manufactures and sells cornstarch, lysine, starch-based sweetener, modified starch, and ancillary corn-based and corn-refined products. Formed in 2006, and headed by CEO Shijun Gao, the company now has 2,161 employees and with the stock’s market cap sitting at HKD HK$1.71B, it comes under the small-cap group.
3838’s shares are now hovering at around -67% beneath its intrinsic value of ¥0.84, at a price tag of HK$0.28, based on my discounted cash flow model. This difference in price and value gives us a chance to buy low. In addition to this, 3838’s PE ratio is currently around 4.22x against its its Food peer level of, 18.16x meaning that relative to its comparable set of companies, 3838’s shares can be purchased for a lower price. 3838 is also strong in terms of its financial health, as current assets can cover liabilities in the near term and over the long run. 3838 also has a miniscule amount of debt on its balance sheet, which gives it headroom to grow and financial flexibility. Dig deeper into China Starch Holdings here.
G.A. Holdings Limited (SEHK:8126)
G.A. Holdings Limited, an investment holding company, engages in the sale of motor vehicles and auto parts, and provision of car-related technical services in Singapore, Hong Kong, and the People’s Republic of China. Founded in 1993, and currently run by Choong Choy, the company size now stands at 898 people and has a market cap of HKD HK$219.10M, putting it in the small-cap stocks category.
8126’s stock is currently hovering at around -84% below its actual level of $2.69, at the market price of HK$0.43, based on my discounted cash flow model. This mismatch signals an opportunity to buy 8126 shares at a discount. In addition to this, 8126’s PE ratio stands at around 3.34x while its Retail Distributors peer level trades at, 24.39x suggesting that relative to its comparable set of companies, we can purchase 8126’s shares for cheaper. 8126 is also in good financial health, with near-term assets able to cover upcoming and long-term liabilities.
Continue research on G.A. Holdings 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.