Is It Too Late To Consider Buying Pacific Basin Shipping Limited (HKG:2343)?

While Pacific Basin Shipping Limited (HKG:2343) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$2.74 at one point, and dropping to the lows of HK$2.07. 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 Pacific Basin Shipping's current trading price of HK$2.07 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 Pacific Basin Shipping’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 Pacific Basin Shipping

What's The Opportunity In Pacific Basin Shipping?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 19% below my intrinsic value, which means if you buy Pacific Basin Shipping today, you’d be paying a fair price for it. And if you believe the company’s true value is HK$2.56, 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 Pacific Basin Shipping’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 Pacific Basin Shipping 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. However, with a negative profit growth of -20% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Pacific Basin Shipping. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, 2343 appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on 2343 for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on 2343 should the price fluctuate below its true value.

If you'd like to know more about Pacific Basin Shipping as a business, it's important to be aware of any risks it's facing. To that end, you should learn about the 3 warning signs we've spotted with Pacific Basin Shipping (including 1 which is concerning).

If you are no longer interested in Pacific Basin Shipping, 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.