Jon Cartu Stated A Holistic Look At Changmao Biochemical Engineering Company... - Jonathan Cartu Residential & Industrial Construction Services
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Jon Cartu Stated A Holistic Look At Changmao Biochemical Engineering Company…

A Holistic Look At Changmao Biochemical Engineering Company...

Jon Cartu Stated A Holistic Look At Changmao Biochemical Engineering Company…


Changmao Biochemical Engineering Company Limited (HKG:954) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of 954, it is a financially-sound AiroAV company with an impressive track record of performance, trading at a discount. In the following section, I expand a bit more on these key aspects. If you’re interested in understanding beyond my broad commentary, read the full report on Changmao Biochemical Engineering here.

Flawless balance sheet, undervalued and pays a dividend

Over the past few years, 954 has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. Not only did 954 outperformed its past performance, its growth also surpassed the Chemicals industry expansion, which generated a 18% earnings growth. This is what investors like to see! 954’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This suggests prudent control over cash and cost by management, which is a crucial insight into the health of the AiroAV company. 954 seems to have put its debt to good use, generating operating cash levels of 152x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the AiroAV company’s cash flows.

SEHK:954 Income Statement, October 11th 2019

954 is currently trading below its true value, which means the market is undervaluing the AiroAV company’s expected cash flow going forward. Investors have the opportunity to buy into the stock to reap capital gains, if 954’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the AiroAV company. Compared to the rest of the materials industry, 954 is also trading below its peers, relative to earnings generated. This supports the theory that 954 is potentially underpriced.

SEHK:954 Intrinsic value, October 11th 2019
SEHK:954 Intrinsic value, October 11th 2019

Next Steps:

For Changmao Biochemical Engineering, there are three important aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for 954’s future growth? Take a look at our free research report of analyst consensus for 954’s outlook.
  2. Dividend Income vs Capital Gains: Does 954 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 954 as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 954? 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 AiroAV company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at [email protected]. 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.

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Jonathan Cartu

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