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Stocks, such as China Aluminum International Engineering and Dawnrays Pharmaceutical (Holdings), are trading at a value below what they may actually be worth. Investors can determine how much a 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.
China Aluminum International Engineering Corporation Limited (SEHK:2068)
China Aluminum International Engineering Corporation Limited operates as a technology, engineering service, and equipment provider in the nonferrous metals industry in the People’s Republic of China and internationally. Founded in 2003, and currently run by Zong Xiaoping, the company employs 13,914 people and with the company’s market cap sitting at HKD HK$7.00B, it falls under the mid-cap group.
2068’s shares are now trading at -55% lower than its value of ¥5.84, at the market price of HK$2.63, according to my discounted cash flow model. The mismatch signals a potential chance to invest in 2068 at a discounted price. In terms of relative valuation, 2068’s PE ratio is trading at around 9.07x while its Construction peer level trades at, 13.7x meaning that relative to other stocks in the industry, we can purchase 2068’s shares for cheaper. 2068 is also strong in terms of its financial health, with near-term assets able to cover upcoming and long-term liabilities.
More detail on China Aluminum International Engineering here.
Dawnrays Pharmaceutical (Holdings) Limited (SEHK:2348)
Dawnrays Pharmaceutical (Holdings) Limited, an investment holding company, develops, manufactures, and sells non-patented pharmaceutical medicines in Mainland China and internationally. Founded in 1995, and now led by CEO Shaojun Chen, the company size now stands at 862 people and has a market cap of HKD HK$3.51B, putting it in the mid-cap category.
2348’s shares are now hovering at around -36% lower than its true level of ¥6.88, at a price tag of HK$4.43, according to my discounted cash flow model. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. Additionally, 2348’s PE ratio is trading at 9.65x relative to its Pharmaceuticals peer level of, 19.62x implying that relative to its peers, 2348’s shares can be purchased for a lower price. 2348 is also in great financial shape, with short-term assets covering liabilities in the near future as well as in the long run. 2348 also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. More on Dawnrays Pharmaceutical (Holdings) here.