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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 China Oriental Group Company Limited (HKG:581), it is a financially-robust company with a a great track record of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my broad commentary, take a look at the report on China Oriental Group here.
Flawless balance sheet, good value and pays a dividend
581 delivered a satisfying double-digit returns of 27% in the most recent year Not surprisingly, 581 outperformed its industry which returned 9.1%, giving us more conviction of the company’s capacity to drive bottom-line growth going forward. 581 is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that 581 has sufficient cash flows and proper cash management in place, which is a crucial insight into the health of the company. 581 appears to have made good use of debt, producing operating cash levels of 2.9x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
581’s shares are now trading at a price below its true value based on its discounted cash flows, indicating a relatively pessimistic market sentiment. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of 581’s earnings, investors now have the opportunity to buy into the stock to reap capital gains. Also, relative to the rest of its peers with similar levels of earnings, 581’s share price is trading below the group’s average. This further reaffirms that 581 is potentially undervalued.
For China Oriental Group, I’ve compiled three important aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for 581’s future growth? Take a look at our free research report of analyst consensus for 581’s outlook.
- Dividend Income vs Capital Gains: Does 581 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 581 as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 581? 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 firstname.lastname@example.org. 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.