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As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Huabao International Holdings Limited (HKG:336), it is a financially-healthy company with a a strong track record high-grade dividend payments, trading at a discount. Below, I've touched on some key aspects you should know on a high level. If you're interested in understanding beyond my broad commentary, take a look at the report on Huabao International Holdings here.
Undervalued with excellent balance sheet and pays a dividend
336's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. 336 appears to have made good use of debt, producing operating cash levels of 0.45x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated. 336's share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts' consensus forecast growth be correct. Compared to the rest of the chemicals industry, 336 is also trading below its peers, relative to earnings generated. This further reaffirms that 336 is potentially undervalued.
Income investors would also be happy to know that 336 is one of the highest dividend payers in the market, with current dividend yield standing at 11%. 336 has also been regularly increasing its dividend payments to shareholders over the past decade.
Next Steps:
For Huabao International Holdings, I've put together three essential factors you should look at:
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Future Outlook: What are well-informed industry analysts predicting for 336’s future growth? Take a look at our free research report of analyst consensus for 336’s outlook.
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Historical Performance: What has 336's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 336? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.