Water Oasis Group and Shenzhen Neptunus Interlong Bio-technique are stocks on my list that are potentially undervalued. This means their current share prices are trading well-below what the companies are actually worth. There’s a few ways you can determine how much a company is actually worth. 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. The discrepancy between the price and value means investors have an opportunity to buy shares at a discount. Below are the stocks I believe are undervalued on all criteria, based on their latest financial data.
Water Oasis Group Limited (SEHK:1161)
Water Oasis Group Limited, an investment holding company, provides beauty and related wellness services. Founded in 1998, and currently headed by CEO Siu Tam, the company currently employs 752 people and with the company’s market capitalisation at HKD HK$727.18M, we can put it in the small-cap stocks category.
1161’s shares are currently floating at around -52% under its actual level of $2, at the market price of $0.95, based on my discounted cash flow model. This mismatch signals an opportunity to buy 1161 shares at a discount. Moreover, 1161’s PE ratio stands at 10.5x while its consumer services peer level trades at 30.1x, suggesting that relative to its comparable company group, 1161’s stock can be bought at a cheaper price. 1161 is also in good financial health, with current assets covering liabilities in the near term and over the long run. The stock’s debt-to equity ratio of 6% has been declining for the last couple of years signifying its capacity to pay down its debt. More on Water Oasis Group here.
Shenzhen Neptunus Interlong Bio-technique Company Limited (SEHK:8329)
Shenzhen Neptunus Interlong Bio-technique Company Limited researches, develops, produces, and sells medicines in the People’s Republic of China. The company employs 1251 people and with the market cap of HKD HK$637.64M, it falls under the small-cap group.
8329’s stock is now floating at around -42% under its intrinsic level of ¥0.66, at a price of ¥0.38, based on its expected future cash flows. The difference between value and price signals a potential opportunity to buy 8329 shares at a discount. Moreover, 8329’s PE ratio stands at around 8x relative to its pharmaceuticals peer level of 18.6x, meaning that relative to its comparable set of companies, we can purchase 8329’s shares for cheaper. 8329 is also a financially robust company, with short-term assets covering liabilities in the near future as well as in the long run. The stock’s debt-to equity ratio of 15% has been declining for the past few years demonstrating 8329’s ability to pay down its debt. More detail on Shenzhen Neptunus Interlong Bio-technique here.