Is Now An Opportune Moment To Examine Hainan Meilan International Airport Company Limited (HKG:357)?

Hainan Meilan International Airport Company Limited (HKG:357), is not the largest company out there, but it saw significant share price movement during recent months on the SEHK, rising to highs of HK$25.60 and falling to the lows of HK$14.70. 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 Hainan Meilan International Airport's current trading price of HK$16.16 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 Hainan Meilan International Airport’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 Hainan Meilan International Airport

What's the opportunity in Hainan Meilan International Airport?

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. 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 8.18x is currently trading slightly above its industry peers’ ratio of 5.59x, which means if you buy Hainan Meilan International Airport today, you’d be paying a relatively reasonable price for it. And if you believe that Hainan Meilan International Airport 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 Hainan Meilan International Airport’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 Hainan Meilan International Airport?

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. 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. With profit expected to grow by 26% over the next couple of years, the future seems bright for Hainan Meilan International Airport. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? 357’s optimistic future growth appears to have been factored into the current share price, 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 357? 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 an eye on 357, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 357, 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.

If you'd like to know more about Hainan Meilan International Airport as a business, it's important to be aware of any risks it's facing. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Hainan Meilan International Airport.

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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.