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Zuoli Kechuang Micro-Finance and Kingboard Chemical Holdings are companies that are currently trading below what they’re actually worth. There’s a few ways you can measure the value of a company – you can forecast how much money it will make in the future and base your valuation off of this, or you can look around at its peers of similar size and industry to roughly estimate what it should be worth. Below, I’ve created a list of companies that compare favourably in all criteria based on their most recent financial data, making them potentially good investments.
Zuoli Kechuang Micro-Finance Company Limited (SEHK:6866)
Zuoli Kechuang Micro-finance Company Limited operates as a microfinance company in the People’s Republic of China. Started in 2011, and now led by CEO Haifeng Hu, the company employs 133 people and with the company’s market cap sitting at HKD HK$1.01B, it falls under the small-cap category.
6866’s shares are currently trading at -58% beneath its value of ¥2.03, at the market price of HK$0.86, according to my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. What’s even more appeal is that 6866’s PE ratio is around 5.48x relative to its Consumer Finance peer level of, 7.63x indicating that relative to its competitors, you can buy 6866 for a cheaper price. 6866 is also a financially healthy 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 32.87% has been dropping over time, signifying 6866’s capacity to reduce its debt obligations year on year. More on Zuoli Kechuang Micro-Finance here.
Kingboard Chemical Holdings Limited (SEHK:148)
Kingboard Chemical Holdings Limited, an investment holding company, manufactures and sells laminates and printed circuit boards. The company now has 42800 employees and with the company’s market cap sitting at HKD HK$34.23B, it falls under the large-cap category.
148’s stock is currently hovering at around -40% under its intrinsic value of $53.78, at a price tag of HK$32.10, based on its expected future cash flows. The divergence signals an opportunity to buy 148 shares at a low price. In terms of relative valuation, 148’s PE ratio stands at 5.99x relative to its Electronic peer level of, 10.11x meaning that relative to its competitors, 148’s shares can be purchased for a lower price. 148 also has a healthy balance sheet, with near-term assets able to cover upcoming and long-term liabilities. Finally, its debt relative to equity is 35.53%, which has been reducing over time, indicating 148’s ability to pay down its debt. Continue research on Kingboard Chemical Holdings here.