What Is CIFI Holdings (Group) Co. Ltd.'s (HKG:884) Share Price Doing?

CIFI Holdings (Group) Co. Ltd. (HKG:884), is not the largest company out there, but it received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$6.90 at one point, and dropping to the lows of HK$4.68. 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$4.94 reflective of the actual value of the mid-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.

View 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. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 4.06x is currently trading slightly below its industry peers’ ratio of 7.14x, 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. Although, there may be an opportunity to buy in the future. This is because CIFI Holdings (Group)’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will CIFI Holdings (Group) generate?

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. 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. With profit expected to grow by 34% 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? It seems like the market has already priced in 884’s positive outlook, 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 tabs on 884, 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 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.

If you want to dive deeper into CIFI Holdings (Group), you'd also look into what risks it is currently facing. Case in point: We've spotted 3 warning signs for CIFI Holdings (Group) you should be mindful of and 1 of them is potentially serious.

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.
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