Should You Investigate Yuexiu Transport Infrastructure Limited (HKG:1052) At HK$3.48?

Yuexiu Transport Infrastructure Limited (HKG:1052), might not be a large cap stock, but it saw significant share price movement during recent months on the SEHK, rising to highs of HK$4.27 and falling to the lows of HK$3.48. 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 Yuexiu Transport Infrastructure's current trading price of HK$3.48 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 Yuexiu Transport Infrastructure’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Yuexiu Transport Infrastructure

What Is Yuexiu Transport Infrastructure Worth?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 8.21x is currently trading slightly above its industry peers’ ratio of 7.65x, which means if you buy Yuexiu Transport Infrastructure today, you’d be paying a relatively reasonable price for it. And if you believe that Yuexiu Transport Infrastructure should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. In addition to this, it seems like Yuexiu Transport Infrastructure’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s trading around the price multiples of other industry peers. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Yuexiu Transport Infrastructure?

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. Yuexiu Transport Infrastructure's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to 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 1052’s positive outlook, with shares trading around industry price multiples. 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 1052? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping tabs on 1052, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for 1052, 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 while earnings quality is important, it's equally important to consider the risks facing Yuexiu Transport Infrastructure at this point in time. Our analysis shows 2 warning signs for Yuexiu Transport Infrastructure (1 is a bit concerning!) and we strongly recommend you look at them before investing.

If you are no longer interested in Yuexiu Transport Infrastructure, 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.