Is Brilliance China Automotive Holdings Limited (HKG:1114) Potentially Undervalued?

Brilliance China Automotive Holdings Limited (HKG:1114), is not the largest company out there, but it saw a significant share price rise of over 20% in the past couple of months on the SEHK. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s take a look at Brilliance China Automotive Holdings’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Brilliance China Automotive Holdings

Is Brilliance China Automotive Holdings Still Cheap?

Great news for investors – Brilliance China Automotive Holdings is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is HK$5.53, but it is currently trading at HK$3.65 on the share market, meaning that there is still an opportunity to buy now. Brilliance China Automotive Holdings’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

Can we expect growth from Brilliance China Automotive Holdings?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. Though in the case of Brilliance China Automotive Holdings, it is expected to deliver a negative earnings growth of -15%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? Although 1114 is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to 1114, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on 1114 for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into Brilliance China Automotive Holdings, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Brilliance China Automotive Holdings has 2 warning signs and it would be unwise to ignore them.

If you are no longer interested in Brilliance China Automotive Holdings, 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.