A Spotlight On China Starch Holdings Limited’s (HKG:3838) Fundamentals

China Starch Holdings Limited (HKG:3838) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of 3838, it is a financially-healthy company with a strong track record superior dividend payments, trading at a discount. In the following section, I expand a bit more on these key aspects. For those interested in digging a bit deeper into my commentary, read the full report on China Starch Holdings here.

Flawless balance sheet, good value and pays a dividend

3838’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 implies that 3838 manages its cash and cost levels well, which is a crucial insight into the health of the company. 3838 seems to have put its debt to good use, generating operating cash levels of 1.6x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows. 3838 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. Also, relative to the rest of its peers with similar levels of earnings, 3838’s share price is trading below the group’s average. This further reaffirms that 3838 is potentially undervalued.

SEHK:3838 Intrinsic value, August 23rd 2019
SEHK:3838 Intrinsic value, August 23rd 2019

3838’s reputation for being one of the best dividend payers in the market is supported by the fact that it has been steadily growing its dividend payments over the past ten years and currently is one of the top yielding companies on the markets, at 8.1%.

SEHK:3838 Historical Dividend Yield, August 23rd 2019
SEHK:3838 Historical Dividend Yield, August 23rd 2019

Next Steps:

For China Starch Holdings, I’ve put together three key aspects you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for 3838’s future growth? Take a look at our free research report of analyst consensus for 3838’s outlook.
  2. Historical Performance: What has 3838’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 3838? 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.