Should You Investigate China Tian Lun Gas Holdings Limited (HKG:1600) At HK$7.74?

China Tian Lun Gas Holdings Limited (HKG:1600), which is in the gas utilities business, and is based in China, received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$9.43 at one point, and dropping to the lows of HK$7.54. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether China Tian Lun Gas Holdings’s current trading price of HK$7.74 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at China Tian Lun Gas Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for China Tian Lun Gas Holdings

Is China Tian Lun Gas Holdings still cheap?

Great news for investors – China Tian Lun Gas Holdings is still trading at a fairly cheap price. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 9.13x is currently well-below the industry average of 17.8x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, China Tian Lun Gas Holdings’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What does the future of China Tian Lun Gas Holdings look like?

SEHK:1600 Past and Future Earnings, September 23rd 2019
SEHK:1600 Past and Future Earnings, September 23rd 2019

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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. China Tian Lun Gas Holdings’s earnings over the next few years are expected to increase by 66%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since 1600 is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on 1600 for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 1600. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.