Is Now The Time To Look At Buying Datang International Power Generation Co., Ltd. (HKG:991)?

Datang International Power Generation Co., Ltd. (HKG:991), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. As a HK$53b market cap stock, it seems odd Datang International Power Generation is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let’s examine Datang International Power Generation’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Datang International Power Generation

What's The Opportunity In Datang International Power Generation?

The stock is currently trading at HK$1.47 on the share market, which means it is overvalued by 37% compared to my intrinsic value of HK$1.07. This means that the buying opportunity has probably disappeared for now. Another thing to keep in mind is that Datang International Power Generation’s share price is quite stable relative to 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 Decent Returns From Datang International Power Generation?

What kind of returns can we expect from Datang International Power Generation in the future? It’s one thing to get a stock at a low price, but the quality of the company is even more important, as its stock may be cheap or expensive for a reason. We can determine the quality of a stock many ways; one way is to look at how much return it generates relative to the money we’ve invested in the stock. Datang International Power Generation is expected to return 13% of your investment in the next couple of years if you buy the stock today. This is a relatively good return on your investment which builds up the case for owning the stock.

What This Means For You

Are you a shareholder? 991’s optimistic future returns appear to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe 991 should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on 991 for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for 991, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Diving deeper into the forecasts for Datang International Power Generation mentioned earlier will help you understand how analysts view the stock going forward. At Simply Wall St, we have the analysts estimates which you can view by clicking here.

If you are no longer interested in Datang International Power Generation, 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.