Is Now An Opportune Moment To Examine Lee and Man Paper Manufacturing Limited (HKG:2314)?

Lee and Man Paper Manufacturing Limited (HKG:2314), is not the largest company out there, but it received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$7.57 at one point, and dropping to the lows of HK$5.47. 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 Lee and Man Paper Manufacturing's current trading price of HK$5.47 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 Lee and Man Paper Manufacturing’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 Lee and Man Paper Manufacturing

What is Lee and Man Paper Manufacturing worth?

Good news, investors! Lee and Man Paper Manufacturing is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Lee and Man Paper Manufacturing’s ratio of 5.77x is below its peer average of 14.38x, which indicates the stock is trading at a lower price compared to the Forestry industry. What’s more interesting is that, Lee and Man Paper Manufacturing’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Lee and Man Paper Manufacturing?

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. However, with a relatively muted profit growth of 4.6% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Lee and Man Paper Manufacturing, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since 2314 is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on 2314 for a while, now might be the time to make a leap. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 2314. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed assessment.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example - Lee and Man Paper Manufacturing has 3 warning signs we think you should be aware of.

If you are no longer interested in Lee and Man Paper Manufacturing, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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