Stock Valuation: Yuzhou Properties Co Ltd (1628)

Name of Company Country of Origin/ Exchange Traded Sector Stock Price
Real Estate – Real Estate Services – Real Estate – General HKD3.18
@ 02 Oct 2018
COMPANY PROFILE Yuzhou Properties Co Ltd is an investment holding company. The Company through its subsidiaries is engaged in property development, property investment, property management and hotel operations in the People’s Republic of China.

Yuzhou Properties Co Ltd is a Chinese real estate developer. The company operates a large number of development projects in China ranging from small-scale residential units, offices, hotels, and villas to large-scale urban complexes. The company is vertically integrated, engaging in land acquisition, project planning, construction, sales, and property management. The company is organized into five operating segments: property development, property investment, property management, hotel operation, and others. The property development segment generates a majority of revenue through sales to external customers. Most of the company’s revenue is generated from customers in Mainland China.

Stock Code 1628
Stock Valuation Below

Yuzhou Properties Price to Book

Price to Earnings, Price to Sales and Price to Cash Flow ratios all value a company based on what it is generating (i.e. profits, sales or cash flow). Price to Book ratio is different in that it values a company based on what it owns (i.e. its net assets). This is usually a suitable valuation indicator for a financial institution, which frequently revalues its assets and liabilities, or a company with huge asset base e.g. utilities company.
At the price of HKD3.18 as at 02 Oct 2018, Yuzhou Properties Co Ltd is trading at a Price to Book Ratio of 0.6 times current book value.  This is a 25.0% discount to current fair Price to Book Ratio of 0.8 times.
Is the stock undervalued? One should not just look at one indicator to determine the fair value of a stock.
ProThinker believes in using a combination of valuation methods to decide whether a stock is over or undervalued? The five ratios we use are Price to Earnings, Price to Sales, Price to Cash Flow, Price to Book and Dividend Yield. We use multiple methods to value a stock because each has its benefits as well as shortcomings. Price to Earnings and Price to Cash Flow Ratios relate stock price to profitability but are meaningless when the comany has negative earnings or cash flows. Price to Sales Ratio is more stable because sales are never negative. However, this does not tell us whether the company is able to sell profitably. Price to Book Ratio gives us an indication as to how much we are paying for the company’s assets but it is not directly related to the company’s profitability. Dividend Yield cannot be used for companies that are paying little to no dividends.
While it is important to value stocks based on multiple valuation methods, this often leads to differing views on valuation. One indicator may suggest that a stock is overvalued while another suggest that it is undervalued. This does not help an investor who needs to make a definite decision whether to buy, hold or sell the stock. That is why we advocate the use of a Composite Valuation Indicator, which is derived from the best combination of the five indicators above. A Composite Valuation Indicator will give you ONE conclusion on whether a stock is under or over valued.
To find out more about our valuation methodology, click here. 
Source of Data: Company description, historical financial statements data and price data are from or Estimates are from – Thomson Reuters.
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