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- SEHK:884
At HK$0.66, Is CIFI Holdings (Group) Co. Ltd. (HKG:884) Worth Looking At Closely?
CIFI Holdings (Group) Co. Ltd. (HKG:884), might not be a large cap stock, but it saw significant share price movement during recent months on the SEHK, rising to highs of HK$3.94 and falling to the lows of HK$0.66. 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 CIFI Holdings (Group)'s current trading price of HK$0.66 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 CIFI Holdings (Group)’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for CIFI Holdings (Group)
What's The Opportunity In CIFI Holdings (Group)?
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 CIFI Holdings (Group)’s ratio of 1.18x is trading slightly below its industry peers’ ratio of 6.08x, which means if you buy CIFI Holdings (Group) today, you’d be paying a decent price for it. And if you believe CIFI Holdings (Group) should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Is there another opportunity to buy low in the future? Since CIFI Holdings (Group)’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from CIFI Holdings (Group)?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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 27% over the next couple of years, the future seems bright for CIFI Holdings (Group). 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? 884’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 884? 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 an eye on 884, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for 884, 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 if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. When we did our research, we found 5 warning signs for CIFI Holdings (Group) (2 don't sit too well with us!) that we believe deserve your full attention.
If you are no longer interested in CIFI Holdings (Group), 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.
About SEHK:884
CIFI Holdings (Group)
Engages in the property development and investment business in the People’s Republic of China.
Undervalued with mediocre balance sheet.