In This Article:
Building up an investment case requires looking at a stock holistically. Today I’ve chosen to put the spotlight on West China Cement Limited (HKG:2233) due to its excellent fundamentals in more than one area. 2233 is a financially-robust company with a an impressive history of performance, trading at a great value. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on West China Cement here.
Very undervalued with excellent balance sheet
Over the past few years, 2233 has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. In addition to beating its historical values, 2233 also outperformed its industry, which also delivered an impressive triple-digit earnings growth. This is what investors like to see! 2233 is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that 2233 manages its cash and cost levels well, which is a crucial insight into the health of the company. 2233 appears to have made good use of debt, producing operating cash levels of 0.47x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
2233’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. Compared to the rest of the basic materials industry, 2233 is also trading below its peers, relative to earnings generated. This bolsters the proposition that 2233’s price is currently discounted.
Next Steps:
For West China Cement, there are three essential aspects you should further research:
-
Future Outlook: What are well-informed industry analysts predicting for 2233’s future growth? Take a look at our free research report of analyst consensus for 2233’s outlook.
-
Dividend Income vs Capital Gains: Does 2233 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 2233 as an investment.
-
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 2233? 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.