Should You Investigate Yangtze Optical Fibre And Cable Joint Stock Limited Company (HKG:6869) At HK$15.68?

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Yangtze Optical Fibre And Cable Joint Stock Limited Company (HKG:6869), which is in the communications business, and is based in China, received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$22 at one point, and dropping to the lows of HK$15.68. 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 Yangtze Optical Fibre And Cable Limited’s current trading price of HK$15.68 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 Yangtze Optical Fibre And Cable Limited’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Yangtze Optical Fibre And Cable Limited

What is Yangtze Optical Fibre And Cable Limited worth?

According to my valuation model, Yangtze Optical Fibre And Cable Limited seems to be fairly priced at around 11% below my intrinsic value, which means if you buy Yangtze Optical Fibre And Cable Limited today, you’d be paying a fair price for it. And if you believe the company’s true value is HK$17.69, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Yangtze Optical Fibre And Cable Limited’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 Yangtze Optical Fibre And Cable Limited?

SEHK:6869 Past and Future Earnings, June 25th 2019
SEHK:6869 Past and Future Earnings, June 25th 2019

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. Though in the case of Yangtze Optical Fibre And Cable Limited, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? 6869 seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in 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 an eye on 6869 for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The stock appears 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 6869 should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Yangtze Optical Fibre And Cable Limited. You can find everything you need to know about Yangtze Optical Fibre And Cable Limited in the latest infographic research report. If you are no longer interested in Yangtze Optical Fibre And Cable Limited, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.