Should You Investigate China Kepei Education Group Limited (HKG:1890) At HK$5.80?

China Kepei Education Group Limited (HKG:1890), 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 stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine China Kepei Education Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for China Kepei Education Group

What is China Kepei Education Group worth?

China Kepei Education Group appears to be overvalued by 40% at the moment, based on my discounted cash flow valuation. The stock is currently priced at HK$5.80 on the market compared to my intrinsic value of HK$4.15. This means that the opportunity to buy China Kepei Education Group at a good price has disappeared! In addition to this, it seems like China Kepei Education Group’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 does the future of China Kepei Education Group look like?

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 grow by 96% over the next couple of years, the future seems bright for China Kepei Education 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? It seems like the market has well and truly priced in 1890’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe 1890 should trade below its current price, selling high and buying it back up again when its price falls towards its real value 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 1890 for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for 1890, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 2 warning signs for China Kepei Education Group 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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