Undervalued companies, such as Tomson Group and Megalogic Technology Holdings, are those that trade at a price below their actual values. There’s a few ways you can measure the value of a company – you can forecast how much money it will make in the future and base your valuation off of this, or you can look around at its peers of similar size and industry to roughly estimate what it should be worth. Below, I’ve created a list of companies that compare favourably in all criteria based on their most recent financial data, making them potentially good investments.
Tomson Group Limited (SEHK:258)
Tomson Group Limited, an investment holding company, engages in property development and investment, hospitality and leisure, securities trading, PVC, and media and entertainment investment businesses in Hong Kong, Macau, and Mainland China. The company size now stands at 550 people and has a market cap of HKD HK$6.24B, putting it in the mid-cap stocks category.
258’s stock is now trading at -92% below its true level of $40.01, at the market price of HK$3.31, based on its expected future cash flows. This mismatch signals an opportunity to buy 258 shares at a discount. Also, 258’s PE ratio is trading at 4.77x while its Real Estate peer level trades at, 6.99x implying that relative to its comparable company group, you can buy 258 for a cheaper price. 258 is also a financially robust company, as short-term assets amply cover upcoming and long-term liabilities. Finally, its debt relative to equity is 5.90%, which has been reducing for the last couple of years signifying its capability to pay down its debt. Continue research on Tomson Group here.
Megalogic Technology Holdings Limited (SEHK:8242)
Megalogic Technology Holdings Limited, an investment holding company, operates as a fabless semiconductor company in the People’s Republic of China, Korea, Taiwan, Russia, and internationally. Formed in 2000, and currently run by Tak Wing Sung, the company size now stands at 47 people and with the stock’s market cap sitting at HKD HK$142.57M, it comes under the small-cap group.
8242’s stock is now floating at around -95% less than its true value of $2.16, at the market price of HK$0.10, according to my discounted cash flow model. This mismatch signals an opportunity to buy 8242 shares at a discount. In terms of relative valuation, 8242’s PE ratio is around 13.28x compared to its Semiconductor peer level of, 19.44x meaning that relative to its peers, we can buy 8242’s stock at a cheaper price today. 8242 is also in good financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. 8242 also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. More on Megalogic Technology Holdings here.
China Harmony New Energy Auto Holding Limited (SEHK:3836)
China Harmony New Energy Auto Holding Limited, an investment holding company, engages in the sale and service of motor vehicles in Mainland China. Started in 2005, and currently lead by Fenglei Liu, the company size now stands at 3,303 people and with the stock’s market cap sitting at HKD HK$6.72B, it comes under the mid-cap category.
3836’s shares are now floating at around -47% beneath its actual value of ¥8.23, at a price of HK$4.38, according to my discounted cash flow model. This mismatch indicates a chance to invest in 3836 at a discounted price. Furthermore, 3836’s PE ratio is trading at around 5.41x while its Specialty Retail peer level trades at, 13.69x implying that relative to its competitors, 3836’s stock can be bought at a cheaper price. 3836 also has a healthy balance sheet, as short-term assets amply cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 28.97% has been falling for the last couple of years demonstrating its capacity to pay down its debt. More detail on China Harmony New Energy Auto Holding here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.