Let’s talk about the popular China Unicom (Hong Kong) Limited (SEHK:762). The company’s shares saw significant share price volatility over the past couple of months on the SEHK, rising to the highs of HK$12.18 and falling to the lows of HK$10.4. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether China Unicom (Hong Kong)’s current trading price of HK$10.92 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at China Unicom (Hong Kong)’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 China Unicom (Hong Kong)
What’s the opportunity in China Unicom (Hong Kong)?The stock seems fairly valued at the moment according to my valuation model. It’s trading around 17% below my intrinsic value, which means if you buy China Unicom (Hong Kong) today, you’d be paying a fair price for it. And if you believe the company’s true value is HK$13.19, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because China Unicom (Hong Kong)’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 does the future of China Unicom (Hong Kong) look like?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. With profit expected to more than double over the next couple of years, the future seems bright for China Unicom (Hong Kong). It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? China Unicom (Hong Kong)’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 financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on China Unicom (Hong Kong), now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on China Unicom (Hong Kong). You can find everything you need to know about China Unicom (Hong Kong) in the latest infographic research report. If you are no longer interested in China Unicom (Hong Kong), you can use our free platform to see my list of over 50 other stocks with a high growth potential.