What Is Sinopec Shanghai Petrochemical Company Limited's (HKG:338) Share Price Doing?

While Sinopec Shanghai Petrochemical Company Limited (HKG:338) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$2.04 at one point, and dropping to the lows of HK$1.58. 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 Sinopec Shanghai Petrochemical's current trading price of HK$1.67 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 Sinopec Shanghai Petrochemical’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 Sinopec Shanghai Petrochemical

Is Sinopec Shanghai Petrochemical still cheap?

According to my valuation model, Sinopec Shanghai Petrochemical seems to be fairly priced at around 12% below my intrinsic value, which means if you buy Sinopec Shanghai Petrochemical today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth HK$1.90, then there’s not much of an upside to gain from mispricing. In addition to this, Sinopec Shanghai Petrochemical has a low beta, which suggests its share price is less volatile than the wider market.

What kind of growth will Sinopec Shanghai Petrochemical 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. However, with a relatively muted profit growth of 1.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Sinopec Shanghai Petrochemical, at least in the short term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in 338’s future outlook, 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 confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on 338, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Sinopec Shanghai Petrochemical as a business, it's important to be aware of any risks it's facing. Every company has risks, and we've spotted 1 warning sign for Sinopec Shanghai Petrochemical you should know about.

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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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