Is KLN Logistics Group (SEHK:636) Undervalued After Its Recent Share Price Recovery?

KLN Logistics Group (SEHK:636) has quietly outperformed the broader market this year, with the share price edging higher and annual revenue and net income both growing around 3%, drawing fresh interest from value focused investors.

See our latest analysis for KLN Logistics Group.

Trading at HK$7.07, the stock has staged a modest near term recovery with a 1 month share price return of 2.02%, but its 3 year total shareholder return of negative 38.67% shows longer term momentum is still rebuilding as investors reassess its earnings resilience and valuation.

If KLN’s steady progress has you thinking about what else could rerate next, this might be a good moment to explore fast growing stocks with high insider ownership.

With earnings ticking higher and the share price still well below analysts’ targets, investors now face a key question: is KLN quietly undervalued, or is the market already factoring in all of its future growth?

Price-to-Earnings of 8.8x: Is it justified?

On a price-to-earnings ratio of 8.8 times, KLN Logistics Group looks inexpensive versus peers, even though the last close price has already recovered somewhat.

The price to earnings multiple compares the company’s current share price to its per share earnings, helping investors judge how much they are paying for each dollar of profit.

For KLN Logistics Group, the picture is mixed, as the stock screens slightly expensive against its own estimated fair P E of 8.5 times, yet it trades at a steep discount to both its Asian logistics peers on 16.5 times and the broader peer group average of 33.9 times. This suggests the market is still pricing in weaker growth and profitability than sector norms even as analysts see upside and our DCF points to material undervaluation.

That discount is stark relative to the industry, where similar businesses command materially higher earnings multiples. If sentiment normalises toward the fair ratio, there is room for the market’s view of KLN Logistics Group to shift closer to sector benchmarks.

Explore the SWS fair ratio for KLN Logistics Group

Result: Price-to-Earnings of 8.8x (UNDERVALUED)

However, softer freight demand or prolonged pricing pressure could slow earnings momentum and prevent KLN’s valuation discount from closing as quickly as bulls expect.

Find out about the key risks to this KLN Logistics Group narrative.

Another View on Value

Our DCF model presents a much stronger case than the earnings multiple alone, with KLN Logistics Group trading about 47% below its estimated fair value of HK$13.35. If that long term cash flow view is closer to reality than today’s sentiment, how long can this gap persist?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out KLN Logistics Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 908 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own KLN Logistics Group Narrative

If you see the numbers differently or want to stress test your own assumptions, you can build a complete view in minutes: Do it your way.

A great starting point for your KLN Logistics Group research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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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.

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