Stocks, such as Jiahua Stores Holdings, trading at a market price below their true values are considered to be undervalued. There’s a few ways you can determine how much a company is actually worth. The most popular methods include discounting the company’s cash flows it is expected to create in the future, or comparing its price to its peers or the value of its assets. The discrepancy between the price and value means investors have an opportunity to buy shares at a discount. Below are the stocks I believe are undervalued on all criteria, based on their latest financial data.

Jiahua Stores Holdings Limited (SEHK:602)

Jiahua Stores Holdings Limited, an investment holding company, operates and manages retail stores and other related businesses in the People’s Republic of China. Established in 1995, and headed by CEO Xiao Xiong Zhuang, the company currently employs 1,360 people and with the market cap of HKD HK$425.38M, it falls under the small-cap group.

602’s shares are currently trading at -42% lower than its actual worth of ¥0.71, at the market price of ¥0.41, according to my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. In addition to this, 602’s PE ratio stands at around 8.5x relative to its consumer retailing peer level of 15.1x, meaning that relative to its competitors, 602’s stock can be bought at a cheaper price. 602 is also a financially robust company, with near-term assets able to cover upcoming and long-term liabilities. 602 also has no debt on its balance sheet, which gives it headroom to grow and financial flexibility. More on Jiahua Stores Holdings here.

Ka Shui International Holdings Limited (SEHK:822)

Ka Shui International Holdings Limited, an investment holding company, primarily manufactures and sells zinc, magnesium, and aluminium alloy die casting products and components. Founded in 1980, and currently lead by Cheong Yiu Wong, the company provides employment to 5,800 people and with the market cap of HKD HK$518.38M, it falls under the small-cap group.

822’s stock is now trading at -65% below its value of $1.65, at the market price of $0.58, based on my discounted cash flow model. This discrepancy signals a potential opportunity to buy 822 shares at a low price. Also, 822’s PE ratio is around 6.6x while its machinery peer level trades at 14.5x, indicating that relative to its comparable company group, 822’s shares can be purchased for a lower price. 822 is also strong financially, with short-term assets covering liabilities in the near future as well as in the long run.

Dig deeper into Ka Shui International Holdings here.

China Starch Holdings Limited (SEHK:3838)

China Starch Holdings Limited, an investment holding company, manufactures and sells cornstarch, lysine, starch-based sweetener, modified starch, and ancillary corn-based and corn-refined products. Formed in 2006, and currently run by Shijun Gao, the company employs 2,161 people and with the company’s market cap sitting at HKD HK$1.92B, it falls under the small-cap group.

3838’s stock is now floating at around -61% beneath its intrinsic value of ¥0.82, at a price of ¥0.32, based on its expected future cash flows. This difference in price and value gives us a chance to buy low. Furthermore, 3838’s PE ratio is trading at around 4.8x while its food peer level trades at 18.2x, meaning that relative to other stocks in the industry, 3838’s shares can be purchased for a lower price. 3838 is also robust in terms of financial health, with near-term assets able to cover upcoming and long-term liabilities. 3838 also has a miniscule amount of debt on its balance sheet, which gives it headroom to grow and financial flexibility. More on China Starch Holdings here.

For more financially sound, undervalued companies to add to your portfolio, you can use our free platform to explore our interactive list of undervalued stocks.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.