Why Shenzhen Techwinsemi Technology Co., Ltd. (SZSE:001309) Could Be Worth Watching

While Shenzhen Techwinsemi Technology Co., Ltd. (SZSE:001309) might not have the largest market cap around , it led the SZSE gainers with a relatively large price hike in the past couple of weeks. While good news for shareholders, the company has traded much higher in the past year. As a CN¥23b market-cap stock, it seems odd Shenzhen Techwinsemi Technology is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine Shenzhen Techwinsemi Technology’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Shenzhen Techwinsemi Technology

What's The Opportunity In Shenzhen Techwinsemi Technology?

Great news for investors – Shenzhen Techwinsemi Technology 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. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 41.1x is currently well-below the industry average of 65.9x, meaning that it is trading at a cheaper price relative to its peers. However, given that Shenzhen Techwinsemi Technology’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.

What kind of growth will Shenzhen Techwinsemi Technology 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 46% over the next couple of years, the future seems bright for Shenzhen Techwinsemi Technology. 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 001309 is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. With a positive 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 001309 for a while, now might be the time to enter the stock. Its buoyant future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 001309. 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 assessment.

If you'd like to know more about Shenzhen Techwinsemi Technology as a business, it's important to be aware of any risks it's facing. Be aware that Shenzhen Techwinsemi Technology is showing 3 warning signs in our investment analysis and 2 of those shouldn't be ignored...

If you are no longer interested in Shenzhen Techwinsemi Technology, 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.