Why Greentown China Holdings Limited (HKG:3900) Could Be Worth Watching

Greentown China Holdings Limited (HKG:3900), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$13.88 at one point, and dropping to the lows of HK$9.43. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Greentown China Holdings' current trading price of HK$9.83 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Greentown China Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Greentown China Holdings

Is Greentown China Holdings Still Cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 14.90% above my intrinsic value, which means if you buy Greentown China Holdings today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is HK$8.56, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, Greentown China Holdings has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from Greentown China Holdings?

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. Greentown China Holdings' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? 3900’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 financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on 3900, 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 want to dive deeper into Greentown China Holdings, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 3 warning signs for Greentown China Holdings (of which 1 is concerning!) you should know about.

If you are no longer interested in Greentown China Holdings, 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.