What Does Leoch International Technology Limited's (HKG:842) Share Price Indicate?

Leoch International Technology Limited (HKG:842), is not the largest company out there, but it received a lot of attention from a substantial price increase on the SEHK over the last few months. 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? Let’s take a look at Leoch International Technology’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Leoch International Technology

Is Leoch International Technology still cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 15.94% above my intrinsic value, which means if you buy Leoch International Technology today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth HK$1.35, there’s only an insignificant downside when the price falls to its real value. Furthermore, Leoch International Technology’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will Leoch International Technology generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With profit expected to more than double over the next couple of years, the future seems bright for Leoch International Technology. 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? It seems like the market has already priced in 842’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 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 tabs on 842, 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.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Be aware that Leoch International Technology is showing 3 warning signs in our investment analysis and 1 of those makes us a bit uncomfortable...

If you are no longer interested in Leoch International Technology, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

When trading Leoch International Technology or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.