Most Attractive Stocks in the Hang Seng Index – Including Tencent Holdings (HKG:0700) and Maxim Integrated Prods (NASDAQ:MXIM)

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Since 1996, The Applied Finance Group has excelled at identifying mispriced securities and helping our clients take advantage of such mispricings within the US markets. Over the last few years, AFG has been working on expanding our framework internationally to help our clients identify solid long-term equity investment opportunities on a global scale. Our global research site, AFGViewGlobal.com has coverage on over 30,000 companies with back-test results proving that the same group of variables that have proven successful on a domestic level are quite successful at identifying winners and losers all over the world.

The key benefit of using The Applied Finance Group's (AFG’s) Economic Margin Framework is that it provides a systematic approach to converting as-reported accounting data into a performance metric that is comparable across time, peers, industries and even countries while eliminating many of the accounting distortions inherent in GAAP. The ability to understand the true economic profitability and the underlying intrinsic value of a company using one consistent method is why AFG expanded its framework internationally. Now investors all over the globe can take advantage of the same institutional quality research and investment tools that AFG’s U.S. clients have been using since 1996 to better understand the expectations embedded in security prices and take advantage of mispriced securities in the market.

AFG uses proven proprietary criteria to identify firms that are more likely to outperform the benchmarks, and filter out those that are least attractive. These criteria include variables such as management quality score, earnings quality, firm valuation and economic performance metrics. AFG has proven through time in identifying winners and losers in the market through its buy and sell lists which continue to have a significant spread in performance between the buys and sells.

Using AFG’s powerful quantitative criteria to screen the Hang Seng index we have identified in the chart below the 5 most undervalued stocks in the index. All these firms contain characteristics of companies that are likely to outperform and rank highly in AFG’s measures of corporate performance and valuation attractiveness.

Source: EconomicMargin.com

AFG's Valuation Metric – Measures the percent to target (deviation between a stock’s current trading price and its AFG current default target price). To derive the intrinsic value of a firm, AFG uses its proprietary Valuation Model (modified discounted cash flow model).

Economic Margin - A corporate performance measurement that addresses the gaps in GAAP, eliminating distortions caused by accounting policies to measure what a company is truly earning above or below their cost of capital.

Management Quality – Assesses management’s ability to make wealth creating decisions.