When Should You Buy COSCO SHIPPING Ports Limited (HKG:1199)?

COSCO SHIPPING Ports Limited (HKG:1199), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today I will analyse the most recent data on COSCO SHIPPING Ports’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for COSCO SHIPPING Ports

What's the opportunity in COSCO SHIPPING Ports?

According to my 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. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that COSCO SHIPPING Ports’s ratio of 7.98x is trading slightly above its industry peers’ ratio of 5.92x, which means if you buy COSCO SHIPPING Ports today, you’d be paying a relatively reasonable price for it. And if you believe that COSCO SHIPPING Ports should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Furthermore, it seems like COSCO SHIPPING Ports’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from COSCO SHIPPING Ports?

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. COSCO SHIPPING Ports' 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 1199’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 financial strength of the company. Have these factors changed since the last time you looked at 1199? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on 1199, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 1199, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about COSCO SHIPPING Ports as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 5 warning signs for COSCO SHIPPING Ports you should be mindful of and 1 of these doesn't sit too well with us.

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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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