A Spotlight On DYNAM JAPAN HOLDINGS Co., Ltd.’s (HKG:6889) Fundamentals

Building up an investment case requires looking at a stock holistically. Today I’ve chosen to put the spotlight on DYNAM JAPAN HOLDINGS Co., Ltd. (HKG:6889) due to its excellent fundamentals in more than one area. 6889 is a financially-robust company with a strong track record of performance, trading at a discount. Below, I’ve touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on DYNAM JAPAN HOLDINGS here.

Flawless balance sheet and undervalued

In the previous year, 6889 has ramped up its bottom line by 16%, with its latest earnings level surpassing its average level over the last five years. In addition to beating its historical values, 6889 also outperformed its industry, which delivered a growth of -5.1%. This is an notable feat for the company. 6889’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 a crucial insight into the health of the company. 6889’s has produced operating cash levels of 10.47x total debt over the past year, which implies that 6889’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.

SEHK:6889 Income Statement, August 19th 2019
SEHK:6889 Income Statement, August 19th 2019

6889 is currently trading below its true value, which means the market is undervaluing the company’s expected cash flow going forward. Investors have the opportunity to buy into the stock to reap capital gains, if 6889’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the hospitality industry, 6889 is also trading below its peers, relative to earnings generated. This bolsters the proposition that 6889’s price is currently discounted.

SEHK:6889 Price Estimation Relative to Market, August 19th 2019
SEHK:6889 Price Estimation Relative to Market, August 19th 2019

Next Steps:

For DYNAM JAPAN HOLDINGS, there are three essential aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for 6889’s future growth? Take a look at our free research report of analyst consensus for 6889’s outlook.
  2. Dividend Income vs Capital Gains: Does 6889 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 6889 as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 6889? 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.