Is Now An Opportune Moment To Examine Anhui Conch Cement Company Limited (HKG:914)?

Anhui Conch Cement Company Limited (HKG:914) saw significant share price movement during recent months on the SEHK, rising to highs of HK$29.10 and falling to the lows of HK$20.40. 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 Anhui Conch Cement's current trading price of HK$20.45 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Anhui Conch Cement’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 Anhui Conch Cement

Is Anhui Conch Cement Still Cheap?

The share price seems sensible at the moment according to my price multiple model, where I compare 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 Anhui Conch Cement’s ratio of 7.48x is trading slightly below its industry peers’ ratio of 10.63x, which means if you buy Anhui Conch Cement today, you’d be paying a decent price for it. And if you believe that Anhui Conch Cement should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Furthermore, it seems like Anhui Conch Cement’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Anhui Conch Cement?

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. Anhui Conch Cement's earnings over the next few years are expected to increase by 63%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? 914’s optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at 914? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on 914, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 914, 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. At Simply Wall St, we found 2 warning signs for Anhui Conch Cement and we think they deserve your attention.

If you are no longer interested in Anhui Conch Cement, 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.