Three Chinese Exchange Stocks Estimated To Be Trading Below Their Intrinsic Value By 10% To 35.5%

Amidst a backdrop of mixed economic indicators from China, including contraction in manufacturing and modest losses in major equity indices, investors might find potential opportunities in stocks that appear undervalued relative to their intrinsic worth. Identifying such stocks requires careful analysis of financial health and market position, particularly in a fluctuating economic environment marked by both domestic challenges and global uncertainties.

Top 10 Undervalued Stocks Based On Cash Flows In China

Name	Current Price	Fair Value (Est)	Discount (Est)
Ningbo Dechang Electrical Machinery Made (SHSE:605555)	CN¥17.59	CN¥33.90	48.1%
Beijing Kawin Technology Share-Holding (SHSE:688687)	CN¥24.22	CN¥46.47	47.9%
Anhui Anli Material Technology (SZSE:300218)	CN¥13.52	CN¥26.59	49.2%
DongHua Testing Technology (SZSE:300354)	CN¥31.92	CN¥58.88	45.8%
Thunder Software TechnologyLtd (SZSE:300496)	CN¥44.16	CN¥84.37	47.7%
China Film (SHSE:600977)	CN¥10.78	CN¥20.17	46.6%
INKON Life Technology (SZSE:300143)	CN¥7.87	CN¥14.64	46.3%
Jiangsu Chuanzhiboke Education Technology (SZSE:003032)	CN¥9.47	CN¥17.49	45.9%
iFLYTEKLTD (SZSE:002230)	CN¥41.20	CN¥76.02	45.8%
Beijing Aosaikang Pharmaceutical (SZSE:002755)	CN¥9.84	CN¥18.84	47.8%

Click here to see the full list of 100 stocks from our Undervalued Chinese Stocks Based On Cash Flows screener.

Let's review some notable picks from our screened stocks

AVIC Industry-Finance Holdings (SHSE:600705)

Overview: AVIC Industry-Finance Holdings Co., Ltd. operates in China, focusing on industrial investment, equity investment, and investment consulting, with a market capitalization of approximately CN¥19.77 billion.

Operations: The company's revenue is derived from industrial investment, equity investment, and investment consulting in China.

Estimated Discount To Fair Value: 35.5%

AVIC Industry-Finance Holdings is trading at CN¥2.24, below the estimated fair value of CN¥3.47, reflecting a significant undervaluation based on discounted cash flow analysis. Despite recent financial setbacks with a reported net loss in Q1 2024 and declining year-over-year revenue, the company is expected to become profitable within three years. Its forecasted revenue growth rate at 16.7% annually outpaces the broader Chinese market projection of 13.6%, indicating potential for recovery and growth despite current challenges.

• Our growth report here indicates AVIC Industry-Finance Holdings may be poised for an improving outlook.
• Unlock comprehensive insights into our analysis of AVIC Industry-Finance Holdings stock in this financial health report.

Haisco Pharmaceutical Group (SZSE:002653)

Overview: Haisco Pharmaceutical Group Co., Ltd. is a company based in China that focuses on the research, development, manufacturing, and sale of pharmaceuticals, with a market capitalization of approximately CN¥34.52 billion.

Operations: The company generates its revenue primarily through the research, development, manufacturing, and sale of pharmaceutical products in China.

Estimated Discount To Fair Value: 20.8%

Haisco Pharmaceutical Group, with a recent uptick in earnings to CN¥295.11 million and sales reaching CN¥3,355.07 million, shows promising financial health. The stock is currently priced at CN¥31.28, which is 20.8% below the calculated fair value of CN¥39.48, signaling potential undervaluation based on cash flows. Forecasts suggest robust annual earnings growth of 36.9%, significantly outpacing the market's 22.2%. However, its projected Return on Equity in three years at 13.6% may raise concerns about future profitability efficiency.

• According our earnings growth report, there's an indication that Haisco Pharmaceutical Group might be ready to expand.
• Click here to discover the nuances of Haisco Pharmaceutical Group with our detailed financial health report.

Zhejiang Jolly PharmaceuticalLTD (SZSE:300181)

Overview: Zhejiang Jolly Pharmaceutical Co., LTD specializes in the research, production, and marketing of Chinese medicinal products, operating both in the People’s Republic of China and internationally, with a market capitalization of CN¥10.93 billion.

Operations: The company generates revenue from the research, production, and marketing of Chinese medicinal products.

Estimated Discount To Fair Value: 10%

Zhejiang Jolly Pharmaceutical Co., LTD, trading at CN¥15.58, appears undervalued by 10%, with a fair value estimated at CN¥17.32. Its earnings grew by 41.8% last year and are expected to increase by 22.31% annually, outstripping the Chinese market's forecast of 22.2%. Despite robust revenue growth projections of 23.1% per year, its dividend coverage is weak due to inadequate cash flow support, raising concerns about sustainability amidst aggressive expansion strategies evidenced by recent significant share issuances.

• The analysis detailed in our Zhejiang Jolly PharmaceuticalLTD growth report hints at robust future financial performance.
• Get an in-depth perspective on Zhejiang Jolly PharmaceuticalLTD's balance sheet by reading our health report here.

Next Steps

• Dive into all 100 of the Undervalued Chinese Stocks Based On Cash Flows we have identified here.
• Have you diversified into these companies? Leverage the power of Simply Wall St's portfolio to keep a close eye on market movements affecting your investments.
• Simply Wall St is your key to unlocking global market trends, a free user-friendly app for forward-thinking investors.

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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