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Water Oasis Group and SIM Technology Group are two of the companies on my list that I consider are 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.
Water Oasis Group Limited (SEHK:1161)
Water Oasis Group Limited, an investment holding company, provides beauty and related wellness services. Founded in 1998, and currently run by Siu Tam, the company now has 752 employees and with the company’s market capitalisation at HKD HK$635.33M, we can put it in the small-cap category.
1161’s stock is now trading at -67% less than its actual worth of $2.53, at the market price of HK$0.83, based on its expected future cash flows. This discrepancy gives us a chance to invest in 1161 at a discount. Also, 1161’s PE ratio is trading at 9.15x relative to its Consumer Services peer level of, 26.95x indicating that relative to its peers, we can buy 1161’s stock at a cheaper price today. 1161 is also strong in terms of its financial health, as current assets can cover liabilities in the near term and over the long run. Finally, its debt relative to equity is 6.24%, which has been reducing for the past few years revealing 1161’s ability to pay down its debt. More detail on Water Oasis Group here.
SIM Technology Group Limited (SEHK:2000)
SIM Technology Group Limited, an investment holding company, designs, develops, manufactures, and sells handsets, solutions and intelligent terminals, and wireless communication modules in the People’s Republic of China. Founded in 1986, and currently headed by CEO Jun Liu, the company provides employment to 2,540 people and with the company’s market cap sitting at HKD HK$908.64M, it falls under the small-cap stocks category.
2000’s stock is now hovering at around -83% under its true level of $2.1, at a price of HK$0.35, according to my discounted cash flow model. This price and value mismatch indicates a potential opportunity to buy the stock at a low price. In terms of relative valuation, 2000’s PE ratio stands at 8.13x while its Communications peer level trades at, 16.48x indicating that relative to its competitors, you can buy 2000’s shares at a cheaper price. 2000 is also a financially healthy company, as short-term assets amply cover upcoming and long-term liabilities.