When Should You Buy Tianneng Power International Limited (HKG:819)?

By
Simply Wall St
Published
January 26, 2022
SEHK:819
Source: Shutterstock

Tianneng Power International Limited (HKG:819), is not the largest company out there, but it saw significant share price movement during recent months on the SEHK, rising to highs of HK$9.83 and falling to the lows of HK$8.03. 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 Tianneng Power International's current trading price of HK$8.17 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Tianneng Power International’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Tianneng Power International

Is Tianneng Power International still cheap?

Good news, investors! Tianneng Power International is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Tianneng Power International’s ratio of 3.25x is below its peer average of 15.97x, which indicates the stock is trading at a lower price compared to the Auto Components industry. Although, there may be another chance to buy again in the future. This is because Tianneng Power International’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Tianneng Power International look like?

earnings-and-revenue-growth
SEHK:819 Earnings and Revenue Growth January 26th 2022

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. Tianneng Power International's earnings over the next few years are expected to increase by 36%, 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? Since 819 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 capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 819 for a while, now might be the time to make a leap. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 819. 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.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example, we've found that Tianneng Power International has 2 warning signs (1 doesn't sit too well with us!) that deserve your attention before going any further with your analysis.

If you are no longer interested in Tianneng Power International, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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