Should You Investigate Beijing Enterprises Water Group Limited (HKG:371) At HK$2.00?

Beijing Enterprises Water Group Limited (HKG:371), might not be a large cap stock, but it saw a significant share price rise of over 20% in the past couple of months on the SEHK. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Beijing Enterprises Water Group’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Beijing Enterprises Water Group

Is Beijing Enterprises Water Group Still Cheap?

Good news, investors! Beijing Enterprises Water Group is still a bargain right now. My valuation model shows that the intrinsic value for the stock is HK$3.02, but it is currently trading at HK$2.00 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that Beijing Enterprises Water Group’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

Can we expect growth from Beijing Enterprises Water Group?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Beijing Enterprises Water Group's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since 371 is currently undervalued, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on 371 for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 371. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

If you'd like to know more about Beijing Enterprises Water Group as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Beijing Enterprises Water Group you should be mindful of and 1 of these is a bit unpleasant.

If you are no longer interested in Beijing Enterprises Water Group, 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.