Why Jinan Shengquan Group Share Holding Co., Ltd. (SHSE:605589) Could Be Worth Watching

Jinan Shengquan Group Share Holding Co., Ltd. (SHSE:605589), might not be a large cap stock, but it saw significant share price movement during recent months on the SHSE, rising to highs of CN¥22.02 and falling to the lows of CN¥17.99. 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 Jinan Shengquan Group Share Holding's current trading price of CN¥19.22 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 Jinan Shengquan Group Share Holding’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Jinan Shengquan Group Share Holding

Is Jinan Shengquan Group Share Holding Still Cheap?

Good news, investors! Jinan Shengquan Group Share Holding is still a bargain right now according to our price multiple model, which compares 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 Jinan Shengquan Group Share Holding’s ratio of 20.37x is below its peer average of 27.34x, which indicates the stock is trading at a lower price compared to the Chemicals industry. What’s more interesting is that, Jinan Shengquan Group Share Holding’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Jinan Shengquan Group Share Holding generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 72% over the next couple of years, the future seems bright for Jinan Shengquan Group Share Holding. 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 605589 is currently trading below the industry PE ratio, it may be a great time to increase 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 financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 605589 for a while, now might be the time to enter the stock. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 605589. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Every company has risks, and we've spotted 2 warning signs for Jinan Shengquan Group Share Holding you should know about.

If you are no longer interested in Jinan Shengquan Group Share Holding, 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