In This Article:
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. Chen Xing Development Holdings and Golden Wheel Tiandi 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 profit from the difference by investing in these cyclical stocks as the current market prices should eventually move towards their true values. If capital gains are what you’re after in your next investment, I’ve put together a list of undervalued stocks you may be interested in, based on the latest financial data from each company.
Chen Xing Development Holdings Limited (SEHK:2286)
Chen Xing Development Holdings Limited, an investment holding company, engages in the development and sale of residential and commercial properties in Mainland China. Founded in 1997, and now run by Wukui Bai, the company currently employs 183 people and has a market cap of HKD HK$975.00M, putting it in the small-cap group.
2286’s shares are currently floating at around -95% under its actual value of ¥40.88, at a price tag of HK$1.95, based on its expected future cash flows. This mismatch signals an opportunity to buy 2286 shares at a discount. Moreover, 2286’s PE ratio is trading at 4.57x against its its Real Estate peer level of, 7.05x implying that relative to other stocks in the industry, we can purchase 2286’s shares for cheaper. 2286 is also strong in terms of its financial health, as short-term assets amply cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 40.26% has been dropping for the last couple of years indicating 2286’s capacity to pay down its debt. More on Chen Xing Development Holdings here.
Golden Wheel Tiandi Holdings Company Limited (SEHK:1232)
Golden Wheel Tiandi Holdings Company Limited, an investment holding company, owns, develops, and operates integrated commercial and residential properties in the People’s Republic of China. Established in 1994, and now led by CEO Kam Wong, the company provides employment to 537 people and with the company’s market capitalisation at HKD HK$1.41B, we can put it in the small-cap group.
1232’s shares are currently floating at around -86% under its actual worth of ¥5.72, at a price tag of HK$0.78, based on my discounted cash flow model. This discrepancy gives us a chance to invest in 1232 at a discount. Also, 1232’s PE ratio stands at around 2.31x relative to its Real Estate peer level of, 7.05x implying that relative to other stocks in the industry, we can buy 1232’s stock at a cheaper price today. 1232 is also in good financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.