Is It Too Late To Consider Buying Wanhua Chemical Group Co., Ltd. (SHSE:600309)?

Today we're going to take a look at the well-established Wanhua Chemical Group Co., Ltd. (SHSE:600309). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the SHSE. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today we will analyse the most recent data on Wanhua Chemical Group’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Wanhua Chemical Group

Is Wanhua Chemical Group Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 16.72% above our intrinsic value, which means if you buy Wanhua Chemical Group today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is CN¥67.96, there’s only an insignificant downside when the price falls to its real value. In addition to this, Wanhua Chemical Group has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from Wanhua Chemical Group?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Wanhua Chemical Group's earnings over the next few years are expected to increase by 36%, 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? 600309’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 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 600309, 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.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. In terms of investment risks, we've identified 2 warning signs with Wanhua Chemical Group, and understanding these should be part of your investment process.

If you are no longer interested in Wanhua Chemical Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.