Brief Commentary On Modern Dental Group Limited’s (HKG:3600) Fundamentals

As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Modern Dental Group Limited (HKG:3600), it is a company that has been able to sustain great financial health, trading at an attractive share price. 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 Modern Dental Group here.

Flawless balance sheet and good value

3600 is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that 3600 manages its cash and cost levels well, which is a key determinant of the company’s health. 3600 appears to have made good use of debt, producing operating cash levels of 0.34x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated. 3600’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. Investors have the opportunity to buy into the stock to reap capital gains, if 3600’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Also, relative to the rest of its peers with similar levels of earnings, 3600’s share price is trading below the group’s average. This further reaffirms that 3600 is potentially undervalued.

SEHK:3600 Intrinsic value, September 21st 2019
SEHK:3600 Intrinsic value, September 21st 2019

Next Steps:

For Modern Dental Group, I’ve compiled three pertinent factors you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for 3600’s future growth? Take a look at our free research report of analyst consensus for 3600’s outlook.
  2. Historical Performance: What has 3600’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 3600? 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.