At HK$26.30, Is Kerry Properties Limited (HKG:683) Worth Looking At Closely?

While Kerry Properties Limited (HKG:683) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the SEHK over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Kerry Properties’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Kerry Properties

What's the opportunity in Kerry Properties?

According to my valuation model, Kerry Properties seems to be fairly priced at around 5.8% below my intrinsic value, which means if you buy Kerry Properties today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth HK$27.91, then there’s not much of an upside to gain from mispricing. Furthermore, Kerry Properties’s low beta implies that the stock is less volatile than the wider market.

What does the future of Kerry Properties look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -4.4% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Kerry Properties. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Currently, 683 appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on 683 for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on 683 should the price fluctuate below its true value.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. For example - Kerry Properties has 1 warning sign we think you should be aware of.

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This article by Simply Wall St is general in nature. 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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