Should You Investigate BBMG Corporation (HKG:2009) At HK$1.49?

While BBMG Corporation (HKG:2009) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the SEHK, rising to highs of HK$1.69 and falling to the lows of HK$1.46. 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 BBMG's current trading price of HK$1.49 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 BBMG’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for BBMG

What's the opportunity in BBMG?

According to my valuation model, the stock is currently overvalued by about 22%, trading at HK$1.49 compared to my intrinsic value of HK$1.22. This means that the opportunity to buy BBMG at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since BBMG’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. 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 BBMG generate?

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 grow by 47% over the next couple of years, the future seems bright for BBMG. 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? 2009’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe 2009 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 tabs on 2009 for some time, 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 2009, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into BBMG, you'd also look into what risks it is currently facing. To that end, you should learn about the 3 warning signs we've spotted with BBMG (including 1 which is significant).

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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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