Stock Analysis

3 Chinese Stocks Estimated To Be Undervalued By Up To 40.9%

Published October 07, 2024

Amid a backdrop of optimism about Beijing's comprehensive support measures, Chinese stocks have surged, with the Shanghai Composite Index and the CSI 300 Index both posting significant gains. This renewed market sentiment presents an opportune moment to explore stocks that may be undervalued, as investors seek opportunities that align with current economic conditions and potential growth prospects.

Top 10 Undervalued Stocks Based On Cash Flows In China

Name	Current Price	Fair Value (Est)	Discount (Est)
JinGuan Electric (SHSE:688517)	CN¥14.82	CN¥28.90	48.7%
Sinomine Resource Group (SZSE:002738)	CN¥36.54	CN¥70.67	48.3%
Zhejiang Huahai Pharmaceutical (SHSE:600521)	CN¥19.59	CN¥37.02	47.1%
Neusoft (SHSE:600718)	CN¥10.25	CN¥19.38	47.1%
Zhejiang Great Shengda PackagingLtd (SHSE:603687)	CN¥7.11	CN¥14.16	49.8%
Jiangsu Hualan New Pharmaceutical MaterialLtd (SZSE:301093)	CN¥24.74	CN¥47.09	47.5%
Crystal Growth & Energy EquipmentLtd (SHSE:688478)	CN¥29.28	CN¥56.32	48%
China Kings Resources GroupLtd (SHSE:603505)	CN¥29.46	CN¥55.81	47.2%
Thunder Software TechnologyLtd (SZSE:300496)	CN¥52.55	CN¥103.80	49.4%
Ningbo Jifeng Auto Parts (SHSE:603997)	CN¥13.70	CN¥25.88	47.1%

Click here to see the full list of 116 stocks from our Undervalued Chinese Stocks Based On Cash Flows screener.

We'll examine a selection from our screener results.

NBTM New Materials Group (SHSE:600114)

Overview: NBTM New Materials Group Co., Ltd. is engaged in the production and sale of powder metallurgy mechanical parts globally, with a market cap of CN¥9.98 billion.

Operations: NBTM New Materials Group Co., Ltd. generates revenue through the global production and sale of powder metallurgy mechanical parts.

Estimated Discount To Fair Value: 40.9%

NBTM New Materials Group is trading at a significant discount to its estimated fair value of CNY 27.38, with the current price at CNY 16.19. Recent earnings reports show strong growth, with net income rising to CNY 189.6 million from CNY 35.67 million year-on-year, though the dividend yield of 1.24% is not well covered by free cash flows. Despite high share price volatility, earnings are projected to grow significantly above market averages over the next three years.

SHSE:600114 Discounted Cash Flow as at Oct 2024

China Cyts Tours Holding (SHSE:600138)

Overview: China Cyts Tours Holding Co., Ltd. is a tourism company that operates both in Mainland China and internationally, with a market cap of CN¥8.03 billion.

Operations: I'm sorry, but the text provided does not include specific revenue segment details for China Cyts Tours Holding Co., Ltd. If you have additional information or data on their revenue segments, I would be happy to help summarize it.

Estimated Discount To Fair Value: 30.4%

China Cyts Tours Holding is trading at CN¥11.09, significantly below its estimated fair value of CN¥15.94. The company recently became profitable, with earnings expected to grow faster than the market at 36.9% annually, though revenue growth is slower at 13.5%. Despite a high level of debt and an unstable dividend track record, it remains undervalued based on discounted cash flow analysis and offers potential for substantial profit growth over the next three years.

SHSE:600138 Discounted Cash Flow as at Oct 2024

Harbin Dongan Auto EngineLtd (SHSE:600178)

Overview: Harbin Dongan Auto Engine Co., Ltd. produces and markets automobile products and has a market cap of CN¥4.90 billion.

Operations: The company generates revenue from its Auto Parts Manufacturing segment, amounting to CN¥4.80 billion.

Estimated Discount To Fair Value: 36.6%

Harbin Dongan Auto Engine Ltd. is trading at CN¥10.31, significantly below its estimated fair value of CN¥16.27, making it undervalued based on discounted cash flow analysis. Despite recent net losses and volatile share prices, the company is expected to achieve profitability within three years with a high forecasted earnings growth rate of 94.66% annually and revenue growth surpassing the market average at 20.7% per year, though return on equity remains low at 5.2%.

SHSE:600178 Discounted Cash Flow as at Oct 2024

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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