Is Now The Time To Look At Buying Hansae Co., Ltd. (KRX:105630)?

While Hansae Co., Ltd. (KRX:105630) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the KOSE over the last few months. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Hansae’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Hansae

Is Hansae still cheap?

Good news, investors! Hansae is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Hansae’s ratio of 10.95x is below its peer average of 19.59x, which indicates the stock is trading at a lower price compared to the Luxury industry. Although, there may be another chance to buy again in the future. This is because Hansae’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Hansae generate?

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. However, with a negative profit growth of -8.8% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Hansae. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although A105630 is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to A105630, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on A105630 for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you'd like to know more about Hansae as a business, it's important to be aware of any risks it's facing. Our analysis shows 4 warning signs for Hansae (2 are potentially serious!) and we strongly recommend you look at them before investing.

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This article by Simply Wall St is general in nature. 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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