Why Kunlun Energy Company Limited (HKG:135) Could Be Worth Watching

Kunlun Energy Company Limited (HKG:135), might not be a large cap stock, but it led the SEHK gainers with a relatively large price hike in the past couple of weeks. 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, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Kunlun Energy’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Kunlun Energy

What is Kunlun Energy worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 3.0% below my intrinsic value, which means if you buy Kunlun Energy today, you’d be paying a reasonable price for it. And if you believe the company’s true value is HK$9.04, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, Kunlun Energy’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will Kunlun Energy generate?

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. However, with a relatively muted profit growth of 6.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Kunlun Energy, at least in the short term.

What this means for you:

Are you a shareholder? 135’s future growth appears to have been factored into the current share price, with shares trading around its fair value. 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 the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on 135, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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 want to dive deeper into Kunlun Energy, you'd also look into what risks it is currently facing. For instance, we've identified 2 warning signs for Kunlun Energy (1 shouldn't be ignored) you should be familiar with.

If you are no longer interested in Kunlun Energy, 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.
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