Should You Think About Buying Henderson Land Development Company Limited (HKG:12) Now?

Let's talk about the popular Henderson Land Development Company Limited (HKG:12). The company's shares saw significant share price movement during recent months on the SEHK, rising to highs of HK$34.10 and falling to the lows of HK$28.10. 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 Henderson Land Development's current trading price of HK$28.95 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 Henderson Land Development’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 Henderson Land Development

Is Henderson Land Development still cheap?

According to my valuation model, Henderson Land Development seems to be fairly priced at around 3.61% above my intrinsic value, which means if you buy Henderson Land Development today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is HK$27.94, there’s only an insignificant downside when the price falls to its real value. Furthermore, Henderson Land Development’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from Henderson Land Development?

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. With profit expected to grow by a double-digit 12% over the next couple of years, the outlook is positive for Henderson Land Development. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has already priced in 12’s positive outlook, with shares trading around its fair value. 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 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 tabs on 12, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, 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.

So while earnings quality is important, it's equally important to consider the risks facing Henderson Land Development at this point in time. To that end, you should learn about the 2 warning signs we've spotted with Henderson Land Development (including 1 which is a bit concerning).

If you are no longer interested in Henderson Land Development, 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.