Is There Now An Opportunity In Xingda International Holdings Limited (HKG:1899)?

Xingda International Holdings Limited (HKG:1899), which is in the auto components business, and is based in China, saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Xingda International Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Xingda International Holdings

What's the opportunity in Xingda International Holdings?

According to my valuation model, Xingda International Holdings seems to be fairly priced at around 4.8% below my intrinsic value, which means if you buy Xingda International Holdings today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth HK$1.75, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Xingda International Holdings’s share price may be more stable over time (relative to the market), as indicated by its low beta.

Can we expect growth from Xingda International Holdings?

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 54% over the next couple of years, the future seems bright for Xingda International Holdings. 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? 1899’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. 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 an eye on 1899, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Xingda International Holdings. You can find everything you need to know about Xingda International Holdings in the latest infographic research report. If you are no longer interested in Xingda International Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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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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