Building up an investment case requires looking at a stock holistically. Today I’ve chosen to put the spotlight on China Medical System Holdings Limited (HKG:867) due to its excellent fundamentals in more than one area. 867 is a financially-sound company with a a strong history of performance, trading at a great value. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on China Medical System Holdings here.

Undervalued with solid track record

867 has a strong track record of performance. In the previous year, 867 delivered an impressive double-digit return of 23% Unsurprisingly, 867 surpassed the Pharmaceuticals industry return of 12%, which gives us more confidence of the company’s capacity to drive earnings going forward. 867 is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. 867 appears to have made good use of debt, producing operating cash levels of 1.13x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.

867’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. Also, relative to the rest of its peers with similar levels of earnings, 867’s share price is trading below the group’s average. This bolsters the proposition that 867’s price is currently discounted.

Next Steps:

For China Medical System Holdings, I’ve put together three relevant aspects you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for 867’s future growth? Take a look at our free research report of analyst consensus for 867’s outlook.

2. Dividend Income vs Capital Gains: Does 867 return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from 867 as an investment.

3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 867? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.