Is It Too Late To Consider Buying China State Construction Development Holdings Limited (HKG:830)?

China State Construction Development Holdings Limited (HKG:830), might not be a large cap stock, but it led the SEHK gainers with a relatively large price hike in the past couple of weeks. Less-covered, small caps tend to present more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on China State Construction Development Holdings’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for China State Construction Development Holdings

What's the opportunity in China State Construction Development Holdings?

According to my valuation model, China State Construction Development Holdings seems to be fairly priced at around 19% below my intrinsic value, which means if you buy China State Construction Development Holdings today, you’d be paying a fair price for it. And if you believe that the stock is really worth HK$0.72, then there’s not much of an upside to gain from mispricing. In addition to this, China State Construction Development Holdings has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will China State Construction Development Holdings generate?

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. China State Construction Development Holdings' earnings over the next few years are expected to increase by 29%, 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? 830’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 track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on 830, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.

If you'd like to know more about China State Construction Development Holdings as a business, it's important to be aware of any risks it's facing. For example, we've discovered 2 warning signs that you should run your eye over to get a better picture of China State Construction Development Holdings.

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This article by Simply Wall St is general in nature. 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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