Stock Analysis

Is Now An Opportune Moment To Examine China State Construction Development Holdings Limited (HKG:830)?

SEHK:830
Source: Shutterstock

While China State Construction Development Holdings Limited (HKG:830) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the SEHK, rising to highs of HK$0.61 and falling to the lows of HK$0.51. 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 China State Construction Development Holdings' current trading price of HK$0.55 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 China State Construction Development Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for China State Construction Development Holdings

Is China State Construction Development Holdings still cheap?

According to my valuation model, China State Construction Development Holdings seems to be fairly priced at around 5.4% below my intrinsic value, which means if you buy China State Construction Development Holdings today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth HK$0.58, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that China State Construction Development Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

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

earnings-and-revenue-growth
SEHK:830 Earnings and Revenue Growth December 1st 2020

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. 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? It seems like the market has already priced in 830’s positive outlook, 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 830, 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.

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. At Simply Wall St, we found 2 warning signs for China State Construction Development Holdings and we think they deserve your attention.

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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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