Is There Now An Opportunity In Sinotruk (Hong Kong) Limited (HKG:3808)?

By
Simply Wall St
Published
May 13, 2022
SEHK:3808
Source: Shutterstock

Sinotruk (Hong Kong) Limited (HKG:3808), might not be a large cap stock, but it saw significant share price movement during recent months on the SEHK, rising to highs of HK$12.90 and falling to the lows of HK$8.25. 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 Sinotruk (Hong Kong)'s current trading price of HK$8.25 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Sinotruk (Hong Kong)’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Sinotruk (Hong Kong)

What's the opportunity in Sinotruk (Hong Kong)?

Good news, investors! Sinotruk (Hong Kong) is still a bargain right now. According to my valuation, the intrinsic value for the stock is HK$11.93, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Another thing to keep in mind is that Sinotruk (Hong Kong)’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What does the future of Sinotruk (Hong Kong) look like?

earnings-and-revenue-growth
SEHK:3808 Earnings and Revenue Growth May 13th 2022

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. 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. However, with a relatively muted profit growth of 6.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Sinotruk (Hong Kong), at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since 3808 is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on 3808 for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 3808. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example, we've found that Sinotruk (Hong Kong) has 4 warning signs (1 shouldn't be ignored!) that deserve your attention before going any further with your analysis.

If you are no longer interested in Sinotruk (Hong Kong), you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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