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Companies with shares trading at a market price below what they are actually worth, such as Future World Financial Holdings and Shanghai Dasheng Agriculture Finance Technology, are deemed undervalued. Smart investors can make money from this discrepancy by buying these shares, because they believe the current market prices will eventually move towards their true value. If you’re looking for capital gains in your next investment, I suggest you take a look at my list of potentially undervalued stocks.
Future World Financial Holdings Limited (SEHK:572)
Future World Financial Holdings Limited, an investment holding company, engages in securities trading and investment activities in the People’s Republic of China. Established in 1997, and now run by Xiaodong Chen, the company currently employs 15 people and with the market cap of HKD HK$1.63B, it falls under the small-cap category.
572’s stock is now floating at around -89% under its actual value of $1.27, at a price tag of HK$0.14, based on my discounted cash flow model. The difference between value and price signals a potential opportunity to buy 572 shares at a discount. In terms of relative valuation, 572’s PE ratio is trading at around 2.08x against its its Capital Markets peer level of, 12.14x suggesting that relative to its peers, you can buy 572’s shares at a cheaper price. 572 is also a financially robust company, with current assets covering liabilities in the near term and over the long run. It’s debt-to-equity ratio of 17.25% has been dropping for the last couple of years signalling 572’s capacity to reduce its debt obligations year on year. More detail on Future World Financial Holdings here.
Shanghai Dasheng Agriculture Finance Technology Co., Ltd. (SEHK:1103)
Shanghai Dasheng Agriculture Finance Technology Co., Ltd., together with its subsidiaries, trades in petrochemical products, and constructs roads and bridges in the People’s Republic of China. Established in 1993, and currently run by Luojiang Mo, the company currently employs 848 people and with the market cap of HKD HK$840.50M, it falls under the small-cap group.
1103’s stock is now hovering at around -64% under its true value of ¥0.24, at a price tag of HK$0.088, based on its expected future cash flows. The divergence signals an opportunity to buy 1103 shares at a low price. Moreover, 1103’s PE ratio stands at 1.79x compared to its Trade Distributors peer level of, 14.41x suggesting that relative to its competitors, 1103’s stock can be bought at a cheaper price. 1103 is also in good financial health, with short-term assets covering liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 65.97% has been falling over the past couple of years signifying 1103’s capacity to reduce its debt obligations year on year. More detail on Shanghai Dasheng Agriculture Finance Technology here.