Why Jaya Tiasa Holdings Berhad (KLSE:JTIASA) Could Be Worth Watching

While Jaya Tiasa Holdings Berhad (KLSE:JTIASA) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the KLSE, rising to highs of RM1.16 and falling to the lows of RM0.58. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Jaya Tiasa Holdings Berhad's current trading price of RM0.58 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Jaya Tiasa Holdings Berhad’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Jaya Tiasa Holdings Berhad

Is Jaya Tiasa Holdings Berhad still cheap?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 4.96x is currently trading slightly below its industry peers’ ratio of 9.2x, which means if you buy Jaya Tiasa Holdings Berhad today, you’d be paying a decent price for it. And if you believe Jaya Tiasa Holdings Berhad should be trading in this range, then there isn’t much room for the share price to grow beyond the levels of other industry peers over the long-term. So, is there another chance to buy low in the future? Given that Jaya Tiasa Holdings Berhad’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 kind of growth will Jaya Tiasa Holdings Berhad 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. 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. Though in the case of Jaya Tiasa Holdings Berhad, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? JTIASA seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in 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 JTIASA, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on JTIASA for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This 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 gel your views on JTIASA should the price fluctuate below the industry PE ratio.

If you'd like to know more about Jaya Tiasa Holdings Berhad as a business, it's important to be aware of any risks it's facing. To that end, you should learn about the 2 warning signs we've spotted with Jaya Tiasa Holdings Berhad (including 1 which is potentially serious).

If you are no longer interested in Jaya Tiasa Holdings Berhad, 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.