Why CK Infrastructure Holdings Limited (HKG:1038) Could Be Worth Watching

CK Infrastructure Holdings Limited (HKG:1038) received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$44.70 at one point, and dropping to the lows of HK$39.45. 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 CK Infrastructure Holdings' current trading price of HK$42.35 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CK Infrastructure Holdings’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 CK Infrastructure Holdings

What's The Opportunity In CK Infrastructure Holdings?

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 11.97x is currently trading slightly below its industry peers’ ratio of 13.8x, which means if you buy CK Infrastructure Holdings today, you’d be paying a reasonable price for it. And if you believe CK Infrastructure Holdings should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. Furthermore, CK Infrastructure Holdings’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. This may mean it is less likely for the stock to fall lower from natural market volatility, which suggests less opportunities to buy moving forward.

Can we expect growth from CK Infrastructure Holdings?

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. Though in the case of CK Infrastructure Holdings, it is expected to deliver a relatively unexciting earnings growth of 6.0%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What This Means For You

Are you a shareholder? 1038’s 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 financial strength of the company. Have these factors changed since the last time you looked at 1038? 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 1038, now may not be the most advantageous time to buy, given it is trading around industry price multiples. However, the positive growth outlook may mean 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 CK Infrastructure Holdings as a business, it's important to be aware of any risks it's facing. For example - CK Infrastructure Holdings has 2 warning signs we think you should be aware of.

If you are no longer interested in CK Infrastructure Holdings, 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.