When Should You Buy CIMC Enric Holdings Limited (HKG:3899)?

CIMC Enric Holdings Limited (HKG:3899), 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$8.28 and falling to the lows of HK$6.36. 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 CIMC Enric Holdings' current trading price of HK$6.72 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 CIMC Enric Holdings’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 CIMC Enric Holdings

What's The Opportunity In CIMC Enric Holdings?

The share price seems sensible at the moment according to my price multiple model, where I compare 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 CIMC Enric Holdings’s ratio of 11.86x is trading slightly above its industry peers’ ratio of 11.21x, which means if you buy CIMC Enric Holdings today, you’d be paying a relatively sensible price for it. And if you believe that CIMC Enric Holdings should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Is there another opportunity to buy low in the future? Since CIMC Enric Holdings’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from CIMC Enric 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. CIMC Enric Holdings' earnings over the next few years are expected to increase by 58%, 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? 3899’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. 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 3899? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on 3899, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 3899, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing CIMC Enric Holdings at this point in time. You'd be interested to know, that we found 1 warning sign for CIMC Enric Holdings and you'll want to know about it.

If you are no longer interested in CIMC Enric 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.