Is There Now An Opportunity In China Tourism Group Duty Free Corporation Limited (SHSE:601888)?

Today we're going to take a look at the well-established China Tourism Group Duty Free Corporation Limited (SHSE:601888). The company's stock saw a decent share price growth of 14% on the SHSE over the last few months. 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? Let’s take a look at China Tourism Group Duty Free’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for China Tourism Group Duty Free

Is China Tourism Group Duty Free Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 7.7% below our intrinsic value, which means if you buy China Tourism Group Duty Free today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth CN¥93.36, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that China Tourism Group Duty Free’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of China Tourism Group Duty Free look like?

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. China Tourism Group Duty Free's earnings over the next few years are expected to increase by 84%, 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? 601888’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 track record of its management team. 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 an eye on 601888, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of China Tourism Group Duty Free.

If you are no longer interested in China Tourism Group Duty Free, 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.