West China Cement Limited (HKG:2233) Has Attractive Fundamentals
As an investor, I look for investments which do not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of West China Cement Limited (HKG:2233), it is a company that has been able to sustain great financial health, trading at an attractive share price. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, take a look at the report on West China Cement here.
Undervalued with excellent balance sheet
2233’s debt-to-equity ratio stands at 33%, which means its debt level is reasonable. This means that 2233’s capital structure strikes a good balance between low-cost debt funding and maintaining financial flexibility without overly restrictive terms of debt. 2233 seems to have put its debt to good use, generating operating cash levels of 0.9x total debt in the most recent year. This is also a good indication as to whether debt is properly covered by the company’s cash flows. 2233 is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. 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. Compared to the rest of the basic materials industry, 2233 is also trading below its peers, relative to earnings generated. This further reaffirms that 2233 is potentially undervalued.
Next Steps:
For West China Cement, there are three fundamental factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for 2233’s future growth? Take a look at our free research report of analyst consensus for 2233’s outlook.
Historical Performance: What has 2233's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of 2233? 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 company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.
