At CN¥7.31, Is China National Chemical Engineering Co., Ltd (SHSE:601117) Worth Looking At Closely?

While China National Chemical Engineering Co., Ltd (SHSE:601117) might not have the largest market cap around , it saw significant share price movement during recent months on the SHSE, rising to highs of CN¥8.50 and falling to the lows of CN¥7.12. 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 National Chemical Engineering's current trading price of CN¥7.31 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at China National Chemical Engineering’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 National Chemical Engineering

What's The Opportunity In China National Chemical Engineering?

Great news for investors – China National Chemical Engineering is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that China National Chemical Engineering’s ratio of 8.06x is below its peer average of 23.11x, which indicates the stock is trading at a lower price compared to the Construction industry. China National Chemical Engineering’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its industry peers, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What kind of growth will China National Chemical Engineering generate?

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. With profit expected to grow by 23% over the next couple of years, the future seems bright for China National Chemical Engineering. 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? Since 601117 is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With an optimistic profit 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 capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 601117 for a while, now might be the time to make a leap. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 601117. 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 investment decision.

So while earnings quality is important, it's equally important to consider the risks facing China National Chemical Engineering at this point in time. In terms of investment risks, we've identified 1 warning sign with China National Chemical Engineering, and understanding it should be part of your investment process.

If you are no longer interested in China National Chemical Engineering, you can use our free platform to see our 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.