Consider These Factors, Then Buy A-Living Services Co., Ltd. (HKG:3319)

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When stocks are plummeting in price, it’s hard to start buying into all the uncertainty. But a disciplined long term investor knows there’s no better time to buy than right now. And I’m not talking about buying into speculative, high-risk stocks. I’m talking about the well-proven, robust track record A-Living Services Co., Ltd.. Why? Size. Financial health. Proven performance.

See our latest analysis for A-Living Services

A-Living Services Co., Ltd. provides property management services under the Agile Property Management and Greenland Property Services brand focusing on mid- to high-end properties in the People’s Republic of China. Founded in 1993, and headed by CEO , the company size now stands at 12.19k people and has a market cap of HK$17b, putting it in the mid-cap stocks category. Volatility in the market is hardly detrimental to the financial health and business operations of a large, well-established company. Although some monetary and fiscal policy changes may impact some corporate financing decisions and strategy, what we’ve learnt over time is that these companies tend to adapt. And having a strong balance sheet and a history of proven success aids in this adaptability.

SEHK:3319 Historical Debt, February 24th 2019
SEHK:3319 Historical Debt, February 24th 2019

With CN¥12m debt on its books, A-Living Services has to pay interest periodically. This means it needs to have enough cash on hand to meet these upcoming expenses. With interest income higher than interest payments, meeting these short-term debt obligations isn’t a problem for A-Living Services. Furthermore, its operating cash flows amply covers its total debt by more than 2x, which is higher than the bare minimum requirement of 0.2x. Not to mention, it meets the basic liquidity requirement with current assets exceeding liabilities, which further builds on its financial strength in the face of a volatile market.

SEHK:3319 Income Statement, February 24th 2019
SEHK:3319 Income Statement, February 24th 2019

3319’s year-on-year earnings growth has been positive over the past five years, with an average annual growth rate of 52%, overtaking the industry growth rate of 11%. It has also returned an ROE of 10% recently, above the market return of 11%. This consistent market outperformance illustrates a robust track record of delivering strong returns over a number of years, increasing my conviction in A-Living Services as an investment over the long run.

Next Steps:

Whether you’re convinced or not, the key takeaway here is that every stock gets hit in a bear market, but not every stock deserves the blow. When prices are dropping like flies, now is the time to do your research and buy at a discount. A-Living Services tick the boxes in terms of its scale, financial health and proven track record, but there are a few other things I have yet to consider. Below I’ve compiled a list of factors for you to continue your reading before you buy:
  1. Future Outlook: What are well-informed industry analysts predicting for 3319’s future growth? Take a look at our free research report of analyst consensus for 3319’s outlook.
  2. Valuation: What is 3319 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 3319 is currently mispriced by the market.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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.