With the Evergrade Property Services (HKSE:06666, Financial) (EVGPF, Financial) collapse causing upheaval in China, affecting all Asian markets and, in fact, markets around the world, it might be worth examining potential value among Chinese equities trading on the American exchanges . Here are four such stocks now available for purchase at or below their book value.
Investors approaching such cheapness would want to carefully examine whether these can weather the storm. Is the trauma set off by this distressed real estate company an opportunity to pick up extraordinary value, or is it just too dangerous to become involved? Please also keep in mind that this is just an initial screening, and investors should always do their own due diligence before deciding whether to invest in a stock.
New Oriental Education and Technology Group
New Oriental Education and Technology Group (EDU, Financial) has dropped from $20 per share earlier this year to just $1.90 per share at close last week. It’s now trading at 66% of book value with a price-earnings ratio of 7.92. The cash-debt ratio is 3.01, while the debt-to-equity is ratio is 0.41 and the debt-to-Ebitda ratio is 5.46.
GuruFocus shows the company as six good signs, two medium warning signs and four severe warning signs. No dividend is paid. The short float comes to 7.72%. Earnings per share grew this year and the five-year record of earnings growth is positive.
TD Holdings
TD Holdings (GLG, Financial) is a technology stock in the commodities trading software industry. The company traded at $2.70 per share in February and now goes for only $0.70 per share. It can be purchased at a 54% discount from its book value. The price-earnings ratio is 46.
GuruFocus shows TD Holdings with two good signs, three medium warning signs and three severe warning signs. The cash-debt ratio is 0.70, the equity-to-asset ratio is 0.80, the debt-to-equity ratio is 0.07 and the debt-to-Ebitda ratio is 1.15. They do not pay a dividend. The short float is a mere 0.17%.
SOS Limited
According to the company’s website, SOS Limited (SOS, Financial) "is a high tech company with AI block chain as its core technology.” It now trades for $2.70 per share after reaching as high as $15 in February. Shares are available at 89% of book value. The price-earnings ratio is 2.94.
The GuruFocus summary of financials shows two good signs and four severe warning signs. The cash-debt ratio is 50.82, while the debt-to-equity ratio is 0.01. No dividend is paid. The short float is a relatively high 13.1%. Earnings per share grew 106% this year and the five-year EPS growth is 15.10%.
Xunlei Limited
Xunlei Limited (XNET, Financial) was established in 2003. According to its website, “It is the world’s leading shared computing and block chain technology innovation enterprise.” The stock traded at $11 per share in February and has since plunged to $3.14 per share. You can buy it now at a 31% discount from book value.
Xunlei’s price-earnings ratio is 21. The GuruFocus summary of the financials shows four good signs, one medium warning sign and two severe warning signs. The cash-debt ratio is 13.3. Debt-to-equity is 0.06, while debt-to-Ebitda is 1.78. They’re not offering a dividend. The short float is 2.94%.
Obviously, there’s tremendous risk in situations where markets are in turmoil. Nonetheless, those looking for value along the lines of Benjamin Graham’s methods might want to further analyze these “below book” China stocks.
