Why We Think China Machinery Engineering Corporation (HKG:1829) Could Be Worth Looking At

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Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on China Machinery Engineering Corporation (HKG:1829) due to its excellent fundamentals in more than one area. 1829 is a financially-healthy company with a a great history superior dividend payments, trading at a discount. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, read the full report on China Machinery Engineering here.

Very undervalued with excellent balance sheet and pays a dividend

1829'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 an important determinant of the company’s health. 1829 appears to have made good use of debt, producing operating cash levels of 0.61x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated. 1829 is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. 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, 1829 is also trading below its peers, relative to earnings generated. This bolsters the proposition that 1829's price is currently discounted.

1829's high dividend payments make it one of the best dividend stocks on the market, and it has also been able to maintain it at a level in which net income is able to cover dividend payments.

Next Steps:

For China Machinery Engineering, I've put together three key aspects you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for 1829’s future growth? Take a look at our free research report of analyst consensus for 1829’s outlook.
2. Historical Performance: What has 1829'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 1829? 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.