At HK$57.40, Is It Time To Put Zhongsheng Group Holdings Limited (HKG:881) On Your Watch List?

Let's talk about the popular Zhongsheng Group Holdings Limited (HKG:881). The company's shares saw a significant share price rise of over 20% in the past couple of months on the SEHK. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Zhongsheng Group Holdings’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Zhongsheng Group Holdings

What is Zhongsheng Group Holdings worth?

According to my valuation model, Zhongsheng Group Holdings seems to be fairly priced at around 3.9% below my intrinsic value, which means if you buy Zhongsheng Group Holdings today, you’d be paying a fair price for it. And if you believe that the stock is really worth HK$59.74, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Zhongsheng Group Holdings’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of Zhongsheng Group Holdings look like?

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. Zhongsheng Group Holdings' earnings over the next few years are expected to increase by 79%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? 881’s optimistic future growth appears to have been factored into the current share price, 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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on 881, now may not be the most advantageous 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.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that Zhongsheng Group Holdings has 1 warning sign and it would be unwise to ignore this.

If you are no longer interested in Zhongsheng Group Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.