Should You Investigate SINOPEC Engineering (Group) Co., Ltd. (HKG:2386) At HK$5.39?

SINOPEC Engineering (Group) Co., Ltd. (HKG:2386), is not the largest company out there, but it led the SEHK gainers with a relatively large price hike in the past couple of weeks. The company is now trading at yearly-high levels following the recent surge in its share price. 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. However, what if the stock is still a bargain? Let’s examine SINOPEC Engineering (Group)’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for SINOPEC Engineering (Group)

Is SINOPEC Engineering (Group) Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 17% below our intrinsic value, which means if you buy SINOPEC Engineering (Group) today, you’d be paying a reasonable price for it. And if you believe the company’s true value is HK$6.46, then there’s not much of an upside to gain from mispricing. In addition to this, SINOPEC Engineering (Group) has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of SINOPEC Engineering (Group) look like?

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. SINOPEC Engineering (Group)'s earnings over the next few years are expected to increase by 34%, 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? 2386’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 financial strength of the company. 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 tabs on 2386, 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 diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

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. For example - SINOPEC Engineering (Group) has 1 warning sign we think you should be aware of.

If you are no longer interested in SINOPEC Engineering (Group), 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.