What Is China Unicom (Hong Kong) Limited's (HKG:762) Share Price Doing?

Today we're going to take a look at the well-established China Unicom (Hong Kong) Limited (HKG:762). The company's stock received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$6.00 at one point, and dropping to the lows of HK$4.38. 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 China Unicom (Hong Kong)'s current trading price of HK$4.38 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.

View our latest analysis for China Unicom (Hong Kong)

What is China Unicom (Hong Kong) worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 4.4% below my intrinsic value, which means if you buy China Unicom (Hong Kong) today, you’d be paying a reasonable price for it. And if you believe the company’s true value is HK$4.58, 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 kind of growth will China Unicom (Hong Kong) 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. 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. China Unicom (Hong Kong)'s earnings over the next few years are expected to increase by 96%, 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? It seems like the market has already priced in 762’s positive outlook, 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 762, 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 2 warning signs for China Unicom (Hong Kong) you should know about.

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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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