July 2024 Insight Into Three Chinese Stocks Estimated Below Intrinsic Value

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As global markets navigate through varying economic signals, China’s stock market has shown resilience amidst challenges, with recent data indicating a contraction in the manufacturing sector yet some sectors still managing modest gains. In this context, identifying stocks that appear undervalued relative to their intrinsic value could present opportunities for discerning investors.

Top 10 Undervalued Stocks Based On Cash Flows In China

Name

Current Price

Fair Value (Est)

Discount (Est)

Ningbo Dechang Electrical Machinery Made (SHSE:605555)

CN¥17.60

CN¥33.82

48%

Shanghai Baolong Automotive (SHSE:603197)

CN¥31.21

CN¥57.25

45.5%

Anhui Anli Material Technology (SZSE:300218)

CN¥13.84

CN¥26.54

47.8%

Thunder Software TechnologyLtd (SZSE:300496)

CN¥43.47

CN¥84.37

48.5%

Eyebright Medical Technology (Beijing) (SHSE:688050)

CN¥66.20

CN¥121.63

45.6%

INKON Life Technology (SZSE:300143)

CN¥7.51

CN¥14.64

48.7%

China Film (SHSE:600977)

CN¥10.54

CN¥20.17

47.8%

Jiangsu Chuanzhiboke Education Technology (SZSE:003032)

CN¥9.00

CN¥17.58

48.8%

Yonyou Network TechnologyLtd (SHSE:600588)

CN¥8.92

CN¥16.93

47.3%

MGI Tech (SHSE:688114)

CN¥42.60

CN¥78.26

45.6%

Click here to see the full list of 95 stocks from our Undervalued Chinese Stocks Based On Cash Flows screener.

Let’s take a closer look at a couple of our picks from the screened companies

Overview: Hubei Dinglong Co., Ltd. operates in various sectors including integrated circuit chip design, semiconductor materials, and printing consumables, with a market capitalization of approximately CN¥21.46 billion.

Operations: The company generates revenue primarily from the photoelectric imaging display and semiconductor process materials industry, totaling approximately CN¥2.80 billion.

Estimated Discount To Fair Value: 10.4%

Hubei Dinglong Ltd., priced at CN¥22.87, trades below the estimated fair value of CN¥25.54, reflecting a modest undervaluation based on cash flows. Despite this, the company’s earnings are expected to grow by 36.39% annually over the next three years, outpacing the Chinese market’s forecasted 22% growth rate. Recent financials show robust year-over-year gains with Q1 net income rising significantly to CN¥81.58 million from CN¥34.73 million previously, supported by substantial revenue growth to CN¥707.99 million from CN¥546.7 million.

SZSE:300054 Discounted Cash Flow as at Jul 2024

Overview: Electric Connector Technology Co., Ltd. operates globally, specializing in the research, design, development, manufacturing, and sale of electronic connectors and related interconnection systems with a market cap of CN¥16.07 billion.

Operations: The company generates CN¥3.19 billion in revenue from its core business in the electronic connector industry.

Estimated Discount To Fair Value: 22.8%

Electric Connector Technology Co., Ltd., trading at CN¥38.36, is valued below its estimated fair value of CN¥49.66, indicating a significant undervaluation based on cash flow analysis. Despite a modest dividend coverage by cash flows, the company’s financial health is bolstered by robust forecasted revenue and earnings growth rates of 26.5% and 29.8% per year respectively—both surpassing market averages significantly. Recent corporate actions include a dividend increase and continued share buybacks, underscoring confidence in its financial trajectory.

SZSE:300679 Discounted Cash Flow as at Jul 2024

Overview: Gambol Pet Group Co., Ltd. is a company based in China that specializes in the research and development, production, and sale of pet food products, with a market capitalization of approximately CN¥20.55 billion.

Operations: The company’s revenue from pet food and supplies totals approximately CN¥4.52 billion.

Estimated Discount To Fair Value: 27.2%

Gambol Pet Group Co., Ltd., with a current trading price of CN¥51.38, appears undervalued by more than 20% compared to its estimated fair value of CN¥70.63, based on discounted cash flow analysis. Recent financials show a robust first-quarter earnings growth to CN¥148.29 million from CN¥84.98 million year-over-year, supporting the company’s strong profit expansion forecast at 22.6% annually over the next three years—outpacing the broader Chinese market projections. Despite these strengths, its projected return on equity in three years is relatively low at 15.4%. Recent corporate activities include dividend affirmations and inclusion in an index, signaling operational stability and market recognition.

SZSE:301498 Discounted Cash Flow as at Jul 2024

Where To Now?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include SZSE:300054 SZSE:300679 and SZSE:301498.

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