The real estate sector performs relatively in-line with the wider economy. Prosperous periods bring about high growth and inflation, leading to strong returns in real estate investments. Pioneer Global Group and Hopefluent Group Holdings are real estate stocks on my list that are potentially undervalued, which means their current share prices are trading well-below what the companies are actually worth. Investors can determine how much a cyclical company is worth based on how much money they are expected to make in the future, or compared to the value of their peers. The list I’ve put together below are of stocks that compare favourably on all criteria, which potentially makes them good investments if you believe the price should eventually reflect the stock’s actual value.
Pioneer Global Group Limited (SEHK:224)
Pioneer Global Group Limited, an investment holding company, engages in real estate and investment businesses. The company provides employment to 17 people and with the market cap of HKD HK$2.19B, it falls under the mid-cap category.
224’s shares are now hovering at around -26% beneath its value of $2.58, at a price of HK$1.90, based on its expected future cash flows. The difference between value and price signals a potential opportunity to buy 224 shares at a discount. Additionally, 224’s PE ratio stands at around 2.59x compared to its Real Estate peer level of, 6.83x suggesting that relative to its peers, 224’s shares can be purchased for a lower price. 224 is also a financially robust company, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. Finally, its debt relative to equity is 31.97%, which has been diminishing over time, signalling its ability to pay down its debt. Dig deeper into Pioneer Global Group here.
Hopefluent Group Holdings Limited (SEHK:733)
Hopefluent Group Holdings Limited, an investment holding company, provides real estate agency services in the People’s Republic of China. Founded in 1995, and currently lead by , the company size now stands at 22,000 people and with the company’s market capitalisation at HKD HK$2.28B, we can put it in the mid-cap stocks category.
733’s stock is now hovering at around -79% beneath its value of $16.31, at a price of HK$3.42, according to my discounted cash flow model. The divergence signals an opportunity to buy 733 shares at a low price. Also, 733’s PE ratio is currently around 6.78x relative to its Real Estate peer level of, 6.83x indicating that relative to its competitors, we can invest in 733 at a lower price. 733 is also in good financial health, as short-term assets amply cover upcoming and long-term liabilities. More detail on Hopefluent Group Holdings here.
Hon Kwok Land Investment Company, Limited (SEHK:160)
Hon Kwok Land Investment Company, Limited, an investment holding company, engages in the property development, investment, and related activities in Hong Kong and Mainland China. The company currently employs 350 people and with the market cap of HKD HK$3.16B, it falls under the mid-cap category.
160’s stock is currently floating at around -81% under its intrinsic level of $23.31, at the market price of HK$4.39, based on its expected future cash flows. This mismatch indicates a chance to invest in 160 at a discounted price. Also, 160’s PE ratio stands at around 1.1x relative to its Real Estate peer level of, 6.83x indicating that relative to its comparable company group, 160’s stock can be bought at a cheaper price. 160 is also strong financially, as current assets can cover liabilities in the near term and over the long run. The stock’s debt-to-equity ratio of 47.41% has been reducing over the past couple of years signalling 160’s capacity to pay down its debt. Continue research on Hon Kwok Land Investment Company here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.