Should You Investigate Perfect Medical Health Management Limited (HKG:1830) At HK$3.07?

Perfect Medical Health Management Limited (HKG:1830), is not the largest company out there, but it saw a decent share price growth in the teens level on the SEHK over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Perfect Medical Health Management’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out the opportunities and risks within the HK Consumer Services industry.

Is Perfect Medical Health Management Still Cheap?

Perfect Medical Health Management is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison 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 Perfect Medical Health Management’s ratio of 12.65x is above its peer average of 7.22x, which suggests the stock is trading at a higher price compared to the Consumer Services industry. In addition to this, it seems like Perfect Medical Health Management’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, 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 Perfect Medical Health Management 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. With profit expected to more than double over the next couple of years, the future seems bright for Perfect Medical Health Management. 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? 1830’s optimistic future growth appears to have been factored into the current share price, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe 1830 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on 1830 for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for 1830, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Perfect Medical Health Management, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 1 warning sign for Perfect Medical Health Management you should know about.

If you are no longer interested in Perfect Medical Health Management, 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.