China Machinery Engineering Corporation (HKG:1829) 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 1829, it is a financially-robust company with a a strong history superior dividend payments, trading at a discount. Below is a brief commentary on these key aspects. For those interested in digger a bit deeper into my commentary, read the full report on China Machinery Engineering here.
Very undervalued with excellent balance sheet and pays a dividend
1829 is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that 1829 has sufficient cash flows and proper cash management in place, which is a key determinant of the company’s health. 1829 seems to have put its debt to good use, generating operating cash levels of 1.15x 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. 1829's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. 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, 1829's share price is trading below the group's average. This bolsters the proposition that 1829's price is currently discounted.
1829's high dividend payments make it one of the best dividend stocks on the market, and its profitability ensures that dividends are well-covered by its net income.
Next Steps:
For China Machinery Engineering, there are three fundamental factors you should further research:
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Future Outlook: What are well-informed industry analysts predicting for 1829’s future growth? Take a look at our free research report of analyst consensus for 1829’s outlook.
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Historical Performance: What has 1829'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.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 1829? 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.
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