Looking At SH Group (Holdings) Limited (HKG:1637) From All Angles

Building up an investment case requires looking at a stock holistically. Today I’ve chosen to put the spotlight on SH Group (Holdings) Limited (HKG:1637) due to its excellent fundamentals in more than one area. 1637 is a company that has been able to sustain great financial health, trading at an attractive share price. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my broad commentary, read the full report on SH Group (Holdings) here.

Flawless balance sheet and undervalued

1637’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 suggests prudent control over cash and cost by management, which is a crucial insight into the health of the company. 1637’s has produced operating cash levels of 3.91x total debt over the past year, which implies that 1637’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings. 1637’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 construction industry, 1637 is also trading below its peers, relative to earnings generated. This supports the theory that 1637 is potentially underpriced.

SEHK:1637 Price Estimation Relative to Market, July 24th 2019
SEHK:1637 Price Estimation Relative to Market, July 24th 2019

Next Steps:

For SH Group (Holdings), there are three fundamental factors you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for 1637’s future growth? Take a look at our free research report of analyst consensus for 1637’s outlook.
  2. Historical Performance: What has 1637’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.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 1637? 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.