As global markets navigate a choppy start to 2025, with U.S. equities facing inflation fears and political uncertainties, investors are keenly assessing opportunities amid the volatility. In this environment, identifying potentially undervalued stocks can be crucial, as these assets may offer value by trading below their intrinsic worth despite broader market challenges.
Let’s take a closer look at a couple of our picks from the screened companies.
Overview: China Jushi Co., Ltd. is a company that manufactures and sells fiberglass both in China and internationally, with a market cap of CN¥44.03 billion.
Operations: The company generates revenue of CN¥15.08 billion from its production and sale of glass fiber and related products.
Estimated Discount To Fair Value: 18.4%
China Jushi is trading at CN¥11.58, approximately 18.4% below its estimated fair value of CN¥14.18, indicating potential undervaluation based on discounted cash flow analysis. Despite lower profit margins this year (12.6%) compared to last year (24.3%), earnings are forecast to grow significantly at 27% annually over the next three years, outpacing the Chinese market’s growth rate of 24.8%. However, its dividend yield is not well covered by free cash flows, which may be a concern for income-focused investors.
SHSE:600176 Discounted Cash Flow as at Jan 2025
Overview: Ningbo Haitian Precision Machinery Ltd (SHSE:601882) is a company involved in the manufacturing of precision machinery, with a market cap of CN¥10.62 billion.
Operations: The company’s revenue primarily comes from its General Equipment Manufacturing segment, which generated CN¥3.31 billion.
Estimated Discount To Fair Value: 46.8%
Ningbo Haitian Precision Machinery is trading at CN¥21.54, significantly below its estimated fair value of CN¥40.45, highlighting undervaluation based on discounted cash flow analysis. Despite a slight decline in sales and net income for the first nine months of 2024, the company is expected to achieve annual earnings growth of over 20% in the coming years. Analysts agree on a potential stock price increase of 35.1%, reflecting optimism about future performance despite current challenges.
SHSE:601882 Discounted Cash Flow as at Jan 2025
Overview: Asymchem Laboratories (Tianjin) Co., Ltd. operates as a contract development and manufacturing organization (CDMO) providing services to the pharmaceutical industry, with a market cap of CN¥24.12 billion.
Operations: The company’s revenue from pharmaceutical technology services amounts to CN¥5.57 billion.
Estimated Discount To Fair Value: 16.3%
Asymchem Laboratories (Tianjin) is trading at CN¥73.99, 16.3% below its fair value estimate of CN¥88.45, suggesting potential undervaluation based on cash flows. Despite a significant drop in sales and net income for the nine months ending September 2024, the company is forecasted to achieve annual earnings growth of 29.7%, outpacing the Chinese market average. However, profit margins have decreased from last year, and its dividend yield of 2.43% lacks coverage by free cash flows.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include SHSE:600176 SHSE:601882 and SZSE:002821.
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