Should You Think About Buying Zhengzhou Coal Mining Machinery Group Company Limited (HKG:564) Now?

Zhengzhou Coal Mining Machinery Group Company Limited (HKG:564), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. As a HK$23b market cap stock, it seems odd Zhengzhou Coal Mining Machinery Group is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Today I will analyse the most recent data on Zhengzhou Coal Mining Machinery Group’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Zhengzhou Coal Mining Machinery Group

What's the opportunity in Zhengzhou Coal Mining Machinery Group?

Great news for investors – Zhengzhou Coal Mining Machinery Group is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is HK$14.31, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Zhengzhou Coal Mining Machinery Group’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will Zhengzhou Coal Mining Machinery Group generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With profit expected to grow by 63% over the next year, the near-term future seems bright for Zhengzhou Coal Mining Machinery Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since 564 is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive 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 financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on 564 for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 564. 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.

If you'd like to know more about Zhengzhou Coal Mining Machinery Group as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 3 warning signs with Zhengzhou Coal Mining Machinery Group, and understanding these should be part of your investment process.

If you are no longer interested in Zhengzhou Coal Mining Machinery Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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.

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