At HK$7.10, Is China YuHua Education Corporation Limited (HKG:6169) Worth Looking At Closely?

China YuHua Education Corporation Limited (HKG:6169), 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. 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? Let’s examine China YuHua Education’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for China YuHua Education

What's the opportunity in China YuHua Education?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 3.6% below my intrinsic value, which means if you buy China YuHua Education today, you’d be paying a fair price for it. And if you believe that the stock is really worth HK$7.37, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, China YuHua Education has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will China YuHua Education 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 China YuHua Education. 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? 6169’s optimistic future growth appears to have been factored into the current share price, 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 an eye on 6169, now may not be the most advantageous 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.

If you'd like to know more about China YuHua Education as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 4 warning signs with China YuHua Education, and understanding them should be part of your investment process.

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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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