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Performance in the real estate sector generally tracks the economic cycle. During periods of high growth and inflation, real estate investments usually post strong returns. However, during an economic bust, these investments tend to underperform. Pioneer Global Group and Hopefluent Group Holdings are real estate companies that are currently trading below what they’re 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.
Pioneer Global Group Limited (SEHK:224)
Pioneer Global Group Limited, an investment holding company, engages in real estate and investment businesses. The company provides employment to 17 people and with the market cap of HKD HK$2.19B, it falls under the mid-cap group.
224’s stock is currently floating at around -26% lower than its actual level of $2.58, at a price tag of HK$1.90, according to my discounted cash flow model. This discrepancy gives us a chance to invest in 224 at a discount. Additionally, 224’s PE ratio is around 2.59x against its its Real Estate peer level of, 6.83x indicating that relative to its comparable set of companies, we can buy 224’s stock at a cheaper price today. 224 is also strong financially, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 31.97% has been reducing for the past few years demonstrating its capacity to reduce its debt obligations year on year. Continue research on Pioneer Global Group here.
Hopefluent Group Holdings Limited (SEHK:733)
Hopefluent Group Holdings Limited, an investment holding company, provides real estate agency services in the People’s Republic of China. Started in 1995, and headed by CEO , the company size now stands at 22,000 people and with the stock’s market cap sitting at HKD HK$2.28B, it comes under the mid-cap stocks category.
733’s stock is now hovering at around -79% beneath its intrinsic level of $16.31, at a price tag of HK$3.42, 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, 733’s PE ratio stands at around 6.78x compared to its Real Estate peer level of, 6.83x suggesting that relative to its peers, we can purchase 733’s shares for cheaper. 733 is also strong in terms of its financial health, with near-term assets able to cover upcoming and long-term liabilities.