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I’ve been keeping an eye on Lee and Man Paper Manufacturing Limited (HKG:2314) because I’m attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe 2314 has a lot to offer. Basically, it is a financially-robust company with a an impressive history of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at the report on Lee and Man Paper Manufacturing here.
Outstanding track record with excellent balance sheet and pays a dividend
2314 delivered a bottom-line expansion of 61% in the prior year, with its most recent earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 24%, which is what investors like to see! 2314’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This indicates that 2314 has sufficient cash flows and proper cash management in place, which is a crucial insight into the health of the company. 2314’s has produced operating cash levels of 0.24x total debt over the past year, which implies that 2314’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
2314 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. Compared to the rest of the forestry industry, 2314 is also trading below its peers, relative to earnings generated. This supports the theory that 2314 is potentially underpriced.
Next Steps:
For Lee and Man Paper Manufacturing, I’ve put together three relevant factors you should further research:
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Future Outlook: What are well-informed industry analysts predicting for 2314’s future growth? Take a look at our free research report of analyst consensus for 2314’s outlook.
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Dividend Income vs Capital Gains: Does 2314 return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from 2314 as an investment.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 2314? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.