At HK$11.76, Is MGM China Holdings Limited (HKG:2282) Worth Looking At Closely?

MGM China Holdings Limited (HKG:2282), 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. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today I will analyse the most recent data on MGM China Holdings’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for MGM China Holdings

Is MGM China Holdings still cheap?

Great news for investors – MGM China Holdings is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is HK$18.31, but it is currently trading at HK$11.76 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, MGM China Holdings’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will MGM China 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. 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. However, with a relatively muted profit growth of 0.5% expected over the next year, growth doesn’t seem like a key driver for a buy decision for MGM China Holdings, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since 2282 is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on 2282 for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 2282. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. You'd be interested to know, that we found 1 warning sign for MGM China Holdings and you'll want to know about it.

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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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