Should You Think About Buying Hutchison Telecommunications Hong Kong Holdings Limited (HKG:215) Now?

While Hutchison Telecommunications Hong Kong Holdings Limited (HKG:215) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the SEHK, rising to highs of HK$1.30 and falling to the lows of HK$1.15. 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 Hutchison Telecommunications Hong Kong Holdings' current trading price of HK$1.23 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 Hutchison Telecommunications Hong Kong Holdings’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 Hutchison Telecommunications Hong Kong Holdings

Is Hutchison Telecommunications Hong Kong Holdings still cheap?

According to my valuation model, Hutchison Telecommunications Hong Kong Holdings seems to be fairly priced at around 3.3% below my intrinsic value, which means if you buy Hutchison Telecommunications Hong Kong Holdings today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth HK$1.27, then there’s not much of an upside to gain from mispricing. What's more, Hutchison Telecommunications Hong Kong Holdings’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What kind of growth will Hutchison Telecommunications Hong Kong Holdings generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Though in the case of Hutchison Telecommunications Hong Kong Holdings, 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? 215 seems fairly priced right now, 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 beneficial 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 215 for a while, now may not be the most advantageous 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. Furthermore, 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 gel your views on 215 should the price fluctuate below its true value.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. Our analysis shows 2 warning signs for Hutchison Telecommunications Hong Kong Holdings (1 is a bit unpleasant!) and we strongly recommend you look at them before investing.

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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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