Should You Think About Buying Yuexiu Transport Infrastructure Limited (HKG:1052) Now?

Yuexiu Transport Infrastructure Limited (HKG:1052), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$4.29 at one point, and dropping to the lows of HK$3.90. 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$4.25 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.

View our latest analysis for Yuexiu Transport Infrastructure

What Is Yuexiu Transport Infrastructure Worth?

Yuexiu Transport Infrastructure is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. I’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 11.13x is currently well-above the industry average of 6.78x, meaning that it is trading at a more expensive price relative to its peers. Another thing to keep in mind is that Yuexiu Transport Infrastructure’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards the levels of its industry peers over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard for it to fall back down into an attractive buying range again.

What kind of growth will Yuexiu Transport Infrastructure generate?

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. Yuexiu Transport Infrastructure's earnings over the next few years are expected to increase by 78%, 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 well and truly priced in 1052’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe 1052 should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on 1052 for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for 1052, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Yuexiu Transport Infrastructure as a business, it's important to be aware of any risks it's facing. For example, we've found that Yuexiu Transport Infrastructure has 3 warning signs (1 is significant!) that deserve your attention before going any further with your analysis.

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.

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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.