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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. Zhong Ao Home Group and Multifield International Holdings are real estate stocks on my list that are potentially undervalued, which means their current share prices are trading well-below what the companies are actually worth. Investors can benefit from buying these cyclical companies while they are discounted, because they gain when the market prices move towards the stocks’ true values. Below is a list of stocks I’ve compiled that are deemed undervalued based on the latest financial data.
Zhong Ao Home Group Limited (SEHK:1538)
Zhong Ao Home Group Limited operates as an independent property management company in the People’s Republic of China. Formed in 2005, and run by CEO Jian Liu, the company provides employment to 6,900 people and with the market cap of HKD HK$754.33M, it falls under the small-cap category.
1538’s shares are now trading at -91% beneath its actual worth of ¥10.32, at a price of HK$0.93, based on its expected future cash flows. This difference in price and value gives us a chance to buy low. Moreover, 1538’s PE ratio is trading at around 6.58x against its its Real Estate peer level of, 6.96x meaning that relative to its peers, you can buy 1538’s shares at a cheaper price. 1538 is also robust in terms of financial health, as short-term assets amply cover upcoming and long-term liabilities.
Continue research on Zhong Ao Home Group here.
Multifield International Holdings Limited (SEHK:898)
Multifield International Holdings Limited, an investment holding company, engages in the investment, acquisition, development, sale, and rental of real estate properties in Hong Kong and Mainland China. Started in 1988, and currently run by Kei Lau, the company currently employs 220 people and with the stock’s market cap sitting at HKD HK$1.94B, it comes under the small-cap stocks category.
898’s stock is currently hovering at around -44% beneath its actual value of $0.83, at the market price of HK$0.47, according to my discounted cash flow model. The difference between value and price signals a potential opportunity to buy 898 shares at a discount. Also, 898’s PE ratio is around 2.98x while its Real Estate peer level trades at, 6.96x indicating that relative to its comparable company group, we can purchase 898’s shares for cheaper. 898 also has a healthy balance sheet, with short-term assets covering liabilities in the near future as well as in the long run.