At RM1.37, Is Bermaz Auto Berhad (KLSE:BAUTO) Worth Looking At Closely?

Bermaz Auto Berhad (KLSE:BAUTO), might not be a large cap stock, but it saw a double-digit share price rise of over 10% in the past couple of months on the KLSE. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Bermaz Auto Berhad’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Bermaz Auto Berhad

What is Bermaz Auto Berhad worth?

According to my valuation model, Bermaz Auto Berhad seems to be fairly priced at around 3.76% above my intrinsic value, which means if you buy Bermaz Auto Berhad today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is MYR1.32, there’s only an insignificant downside when the price falls to its real value. Furthermore, Bermaz Auto Berhad’s low beta implies that the stock is less volatile than the wider market.

What does the future of Bermaz Auto Berhad look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 89% over the next couple of years, the future seems bright for Bermaz Auto Berhad. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has already priced in BAUTO’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on BAUTO, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Bermaz Auto Berhad as a business, it's important to be aware of any risks it's facing. To that end, you should learn about the 2 warning signs we've spotted with Bermaz Auto Berhad (including 1 which is potentially serious).

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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. 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.
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