3 Chinese Stocks That Might Be Undervalued Based On Current Estimates

In recent weeks, Chinese equities have shown mixed performance amid weak manufacturing data and ongoing economic challenges. Despite these headwinds, the Shanghai Composite Index managed a slight gain, while the blue-chip CSI 300 and Hong Kong's Hang Seng Index experienced declines. Identifying undervalued stocks in this environment requires looking for companies with strong fundamentals that may be temporarily overlooked by the market.

Top 10 Undervalued Stocks Based On Cash Flows In China

Name	Current Price	Fair Value (Est)	Discount (Est)
Proya CosmeticsLtd (SHSE:603605)	CN¥86.15	CN¥163.28	47.2%
Changsha DIALINE New Material Sci.&Tech (SZSE:300700)	CN¥6.73	CN¥13.37	49.7%
Gaona Aero Material (SZSE:300034)	CN¥15.54	CN¥30.74	49.4%
Jiangsu Hualan New Pharmaceutical MaterialLtd (SZSE:301093)	CN¥19.23	CN¥37.68	49%
Skyworth Digital (SZSE:000810)	CN¥7.84	CN¥15.05	47.9%
Guangzhou Tinci Materials Technology (SZSE:002709)	CN¥15.21	CN¥29.13	47.8%
China Kings Resources GroupLtd (SHSE:603505)	CN¥25.87	CN¥50.30	48.6%
Qingdao NovelBeam TechnologyLtd (SHSE:688677)	CN¥32.48	CN¥63.00	48.4%
Jiugui Liquor (SZSE:000799)	CN¥40.89	CN¥81.05	49.5%
Chengdu Olymvax Biopharmaceuticals (SHSE:688319)	CN¥9.40	CN¥17.83	47.3%

Click here to see the full list of 102 stocks from our Undervalued Chinese Stocks Based On Cash Flows screener.

Let's dive into some prime choices out of the screener.

Guanghui Energy (SHSE:600256)

Overview: Guanghui Energy Co., Ltd. operates in the energy development business in China with a market cap of CN¥38.98 billion.

Operations: The company's revenue segments include energy development in China.

Estimated Discount To Fair Value: 16.2%

Guanghui Energy is trading 16.2% below its estimated fair value of CN¥7.16, suggesting it may be undervalued based on cash flows. Despite high debt levels and a recent drop in profit margins from 17.4% to 5.8%, the company's earnings are forecast to grow significantly at 28.88% per year, outpacing the Chinese market's growth rate of 22%. However, its dividend yield of 11.67% is not well covered by earnings, raising sustainability concerns.

• Our growth report here indicates Guanghui Energy may be poised for an improving outlook.
• Delve into the full analysis health report here for a deeper understanding of Guanghui Energy.

Guangzhou Tinci Materials Technology (SZSE:002709)

Overview: Guangzhou Tinci Materials Technology Co., Ltd. (SZSE:002709) operates in the chemical materials industry and has a market cap of approximately CN¥29.04 billion.

Operations: Guangzhou Tinci Materials Technology generates revenue primarily from its Fine Chemical Industry segment, amounting to CN¥13.55 billion.

Estimated Discount To Fair Value: 47.8%

Guangzhou Tinci Materials Technology is trading 47.8% below its estimated fair value of CN¥29.13, highlighting potential undervaluation based on cash flows. Earnings are forecast to grow significantly at 25.23% per year, outpacing the Chinese market's growth rate of 22%. However, return on equity is expected to be low at 12.9%, and profit margins have decreased from 22.9% to 9.7%. The dividend yield of 1.97% is not well covered by free cash flows.

• In light of our recent growth report, it seems possible that Guangzhou Tinci Materials Technology's financial performance will exceed current levels.
• Click to explore a detailed breakdown of our findings in Guangzhou Tinci Materials Technology's balance sheet health report.

Yunnan Botanee Bio-Technology GroupLTD (SZSE:300957)

Overview: Yunnan Botanee Bio-Technology Group Co. LTD, with a market cap of CN¥19.96 billion, manufactures and sells skincare and makeup products in China.

Operations: The company's revenue segments (in millions of CN¥) are as follows: skincare products contribute CN¥3,500.00 million and makeup products account for CN¥1,200.00 million.

Estimated Discount To Fair Value: 35.3%

Yunnan Botanee Bio-Technology Group LTD is trading 35.3% below its estimated fair value of CN¥73.36, suggesting it may be undervalued based on cash flows. Earnings are forecast to grow at 22.69% annually, surpassing the Chinese market's growth rate of 22%. However, profit margins have declined from 21% to 13.5%, and return on equity is expected to be low at 17.5%. The company recently completed a share buyback worth CN¥229.69 million but has an unstable dividend track record with recent decreases in payouts.

• Our comprehensive growth report raises the possibility that Yunnan Botanee Bio-Technology GroupLTD is poised for substantial financial growth.
• Click here and access our complete balance sheet health report to understand the dynamics of Yunnan Botanee Bio-Technology GroupLTD.

Taking Advantage

• Unlock our comprehensive list of 102 Undervalued Chinese Stocks Based On Cash Flows by clicking here.
• Already own these companies? Link your portfolio to Simply Wall St and get alerts on any new warning signs to your stocks.
• Discover a world of investment opportunities with Simply Wall St's free app and access unparalleled stock analysis across all markets.

Interested In Other Possibilities?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
• Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.
• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.

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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