Assessing Lygend Resources & Technology’s (SEHK:2245) Valuation After Shareholders Approve Key Related-Party Deals

Shareholders at Lygend Resources & Technology (SEHK:2245) have just signed off on a slate of related party deals, a governance win that helps clarify past transactions and underpins confidence in its overseas nickel operations.

See our latest analysis for Lygend Resources & Technology.

That backdrop helps explain why the stock has caught a bid recently, with an 8.56% 1 day share price return, 12.11% over seven days, and a powerful 185.35% year to date share price return, alongside a 160.12% 1 year total shareholder return that hints momentum is still building rather than fading.

If Lygend’s rally has you thinking about what else is moving, this could be a useful moment to explore fast growing stocks with high insider ownership as a fresh hunting ground for new ideas.

With the share price already up sharply and trading only modestly below analyst targets, the key question now is whether Lygend is still undervalued on fundamentals or if the market is already pricing in its future growth.

Price-to-Earnings of 10.2x: Is it justified?

Lygend Resources & Technology looks inexpensive at its last close of HK$18.89, with the stock trading on a price-to-earnings ratio of 10.2x that screens as good value versus peers.

The price-to-earnings multiple compares what investors are paying today for each unit of the company’s earnings, a key lens for a profitable, growing metals and mining business. For Lygend, solid recent earnings momentum and expectations of significantly faster than market profit growth suggest the market may not be fully pricing in its earnings power at this level.

Compared with both the Hong Kong Metals and Mining industry average P E of 16.1x and a fair P E of 17.7x implied by our regression based fair ratio, Lygend’s 10.2x multiple looks materially lower and leaves ample room for the valuation to catch up if execution stays on track.

Explore the SWS fair ratio for Lygend Resources & Technology

Result: Price-to-Earnings of 10.2x (UNDERVALUED)

However, investors should watch for commodity price volatility and execution risks in its capital intensive overseas nickel projects, which could quickly pressure margins.

Find out about the key risks to this Lygend Resources & Technology narrative.

Another View: SWS DCF Signals Deeper Upside

Our DCF model tells a stronger story than the earnings multiple, putting fair value near HK$40.93 versus the current HK$18.89, a roughly 54% discount that suggests the market could be heavily underestimating long term cash flows. Is that gap an opportunity or a warning?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Lygend Resources & Technology for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 914 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Lygend Resources & Technology Narrative

If you would rather trust your own homework and challenge these assumptions, you can build a personalised view of Lygend in minutes: Do it your way.

A great starting point for your Lygend Resources & Technology research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.

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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.

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