Why Fundamental Investors Might Love Greentown Service Group Co. Ltd. (HKG:2869)

Attractive stocks have exceptional fundamentals. In the case of Greentown Service Group Co. Ltd. (HKG:2869), there’s is a financially-robust company with a strong history and a excellent growth outlook. Below is a brief commentary on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at the report on Greentown Service Group here.

Flawless balance sheet with high growth potential

Investors in search of impressive top-line expansion should look no further than 2869, with its expected 74% revenue growth in the upcoming year. This is expected to flow down into an impressive return on equity of 27% over the next couple of years. 2869 delivered a bottom-line expansion of 30% in the prior year, with its most recent earnings level surpassing its average level over the last five years. This strong performance generated a robust double-digit return on equity of 21%, which is an notable feat for the company.

SEHK:2869 Past and Future Earnings, February 27th 2019
SEHK:2869 Past and Future Earnings, February 27th 2019

2869’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 indicates that 2869 has sufficient cash flows and proper cash management in place, which is a crucial insight into the health of the company. Looking at 2869’s capital structure, the company has no debt on its balance sheet. It has only utilized funding from its equity capital to run the business, which is rather impressive for a HK$20b market cap company. 2869 has plenty of financial flexibility, without debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future.

SEHK:2869 Historical Debt, February 27th 2019
SEHK:2869 Historical Debt, February 27th 2019

Next Steps:

For Greentown Service Group, I’ve compiled three key aspects you should further research:

  1. Valuation: What is 2869 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 2869 is currently mispriced by the market.
  2. Dividend Income vs Capital Gains: Does 2869 return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from 2869 as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 2869? 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.