At CN¥15.06, Is Tongkun Group Co., Ltd. (SHSE:601233) Worth Looking At Closely?

Tongkun Group Co., Ltd. (SHSE:601233), 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 SHSE. The recent share price gains has brought the company back closer to its yearly peak. With many analysts covering the mid-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? Let’s examine Tongkun Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Tongkun Group

What's The Opportunity In Tongkun Group?

The stock is currently trading at CN¥15.06 on the share market, which means it is overvalued by 21% compared to our intrinsic value of CN¥12.41. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that Tongkun Group’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Tongkun 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. Tongkun Group's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? 601233’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe 601233 should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on 601233 for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for 601233, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Tongkun Group as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 2 warning signs for Tongkun Group (of which 1 is concerning!) you should know about.

If you are no longer interested in Tongkun Group, 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.

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