3 Chinese Stocks That Could Be Trading Below Their Estimated Value

Simply Wall St · 10/15 22:08

Amid recent declines in Chinese equities, with the Shanghai Composite Index and blue-chip CSI 300 both experiencing significant drops, investors are closely monitoring potential opportunities that may arise from these market shifts. In this context, identifying undervalued stocks can be crucial as they might offer a chance to capitalize on discrepancies between current market prices and their estimated intrinsic values.

Top 10 Undervalued Stocks Based On Cash Flows In China

Name Current Price Fair Value (Est) Discount (Est)
HangzhouS MedTech (SHSE:688581) CN¥56.83 CN¥109.13 47.9%
Beijing Konruns PharmaceuticalLtd (SHSE:603590) CN¥23.11 CN¥46.03 49.8%
Wuhan Keqian BiologyLtd (SHSE:688526) CN¥12.95 CN¥25.45 49.1%
Range Intelligent Computing Technology Group (SZSE:300442) CN¥30.96 CN¥58.53 47.1%
Crystal Growth & Energy EquipmentLtd (SHSE:688478) CN¥28.18 CN¥56.04 49.7%
Neusoft (SHSE:600718) CN¥9.74 CN¥19.30 49.5%
Seres GroupLtd (SHSE:601127) CN¥89.89 CN¥172.12 47.8%
Brilliance Technology (SZSE:300542) CN¥20.48 CN¥40.62 49.6%
Ningbo Jifeng Auto Parts (SHSE:603997) CN¥12.95 CN¥25.82 49.8%
Yangmei ChemicalLtd (SHSE:600691) CN¥2.07 CN¥3.96 47.7%

Click here to see the full list of 109 stocks from our Undervalued Chinese Stocks Based On Cash Flows screener.

Let's dive into some prime choices out of the screener.

Ficont Industry (Beijing) (SHSE:605305)

Overview: Ficont Industry (Beijing) Co., Ltd. manufactures and supplies wind turbine tower internals and safety systems for wind turbine manufacturers in China and internationally, with a market cap of CN¥5.90 billion.

Operations: The company generates revenue of CN¥1.23 billion from its Construction Machinery & Equipment segment.

Estimated Discount To Fair Value: 38.8%

Ficont Industry (Beijing) is trading at CN¥27.77, significantly below its estimated fair value of CN¥45.4, indicating a substantial undervaluation based on discounted cash flows. The company reported strong earnings growth with net income rising to CN¥140.43 million for the half year ended June 30, 2024, from CN¥81.76 million the previous year. Revenue is forecast to grow at 25.3% annually, outpacing the Chinese market's average growth rate of 13.2%.

SHSE:605305 Discounted Cash Flow as at Oct 2024
SHSE:605305 Discounted Cash Flow as at Oct 2024

Beijing SDL TechnologyLtd (SZSE:002658)

Overview: Beijing SDL Technology Co., Ltd. develops and sells environmental monitoring products in China, with a market cap of CN¥3.88 billion.

Operations: The company's revenue segments include the development and sale of environmental monitoring products in China.

Estimated Discount To Fair Value: 40.8%

Beijing SDL Technology Ltd. is trading at CN¥6.22, significantly below its estimated fair value of CN¥10.5, highlighting a substantial undervaluation based on discounted cash flows. Despite a recent decline in half-year revenue to CN¥574.8 million from CN¥637.16 million and net income to CN¥49.38 million from CN¥82.13 million year-over-year, earnings are forecast to grow 23.7% annually, surpassing the Chinese market's average growth rate of 23.3%.

SZSE:002658 Discounted Cash Flow as at Oct 2024
SZSE:002658 Discounted Cash Flow as at Oct 2024

Bichamp Cutting Technology (Hunan) (SZSE:002843)

Overview: Bichamp Cutting Technology (Hunan) Co., Ltd. operates in the cutting tools industry and has a market cap of CN¥4.12 billion.

Operations: Bichamp Cutting Technology (Hunan) Co., Ltd. does not provide specific revenue segments in the available data.

Estimated Discount To Fair Value: 22.7%

Bichamp Cutting Technology (Hunan) Co., Ltd. is trading at CN¥16.98, well below its estimated fair value of CN¥21.96, indicating a significant undervaluation based on discounted cash flows. Despite recent volatility and past shareholder dilution, the company's earnings are projected to grow 22.88% annually over the next three years, outpacing market revenue growth rates with a forecasted increase of 23% per year. Recent inclusion in the S&P Global BMI Index may enhance visibility among investors.

SZSE:002843 Discounted Cash Flow as at Oct 2024
SZSE:002843 Discounted Cash Flow as at Oct 2024

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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.