At HK$0.36, Is China South City Holdings Limited (HKG:1668) Worth Looking At Closely?

China South City Holdings Limited (HKG:1668), is not the largest company out there, but it saw significant share price movement during recent months on the SEHK, rising to highs of HK$0.49 and falling to the lows of HK$0.36. 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 China South City Holdings' current trading price of HK$0.36 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at China South City Holdings’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 China South City Holdings

What Is China South City Holdings Worth?

Good news, investors! China South City Holdings is still a bargain right now. My valuation model shows that the intrinsic value for the stock is HK$0.50, but it is currently trading at HK$0.36 on the share market, meaning that there is still an opportunity to buy now. However, given that China South City Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will China South City Holdings 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. In China South City Holdings' case, its revenues over the next couple of years are expected to double, indicating an incredibly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since 1668 is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on 1668 for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 1668. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

If you want to dive deeper into China South City Holdings, you'd also look into what risks it is currently facing. Case in point: We've spotted 2 warning signs for China South City Holdings you should be mindful of and 1 of these is concerning.

If you are no longer interested in China South City Holdings, 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.