Why Hankuk Carbon Co., Ltd. (KRX:017960) Could Be Worth Watching

While Hankuk Carbon Co., Ltd. (KRX:017960) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the KOSE. As a 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 Hankuk Carbon’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Hankuk Carbon

What's the opportunity in Hankuk Carbon?

According to my valuation model, Hankuk Carbon seems to be fairly priced at around 18% below my intrinsic value, which means if you buy Hankuk Carbon today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth ₩14414.17, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Hankuk Carbon’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Hankuk Carbon look like?

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. 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 -8.6% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Hankuk Carbon. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? A017960 seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on A017960 for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on A017960 should the price fluctuate below its true value.

If you want to dive deeper into Hankuk Carbon, you'd also look into what risks it is currently facing. To that end, you should learn about the 2 warning signs we've spotted with Hankuk Carbon (including 1 which is potentially serious).

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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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