Why China Modern Dairy Holdings Ltd. (HKG:1117) Could Be Worth Watching

While China Modern Dairy Holdings Ltd. (HKG:1117) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the SEHK over the last few months. 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. But what if there is still an opportunity to buy? Let’s take a look at China Modern Dairy Holdings’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for China Modern Dairy Holdings

Is China Modern Dairy Holdings still cheap?

Good news, investors! China Modern Dairy Holdings is still a bargain right now. My valuation model shows that the intrinsic value for the stock is HK$3.23, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, China Modern Dairy 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.

Can we expect growth from China Modern Dairy Holdings?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With profit expected to more than double over the next couple of years, the future seems bright for China Modern Dairy Holdings. 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? Since 1117 is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. 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 1117 for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 1117. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

If you want to dive deeper into China Modern Dairy Holdings, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 4 warning signs for China Modern Dairy Holdings and you'll want to know about them.

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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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