Is It Time To Consider Buying Malaysian Pacific Industries Berhad (KLSE:MPI)?

While Malaysian Pacific Industries Berhad (KLSE:MPI) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the KLSE over the last few months. 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, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Malaysian Pacific Industries Berhad’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Malaysian Pacific Industries Berhad

Is Malaysian Pacific Industries Berhad Still Cheap?

According to my valuation model, the stock is currently overvalued by about 24%, trading at RM28.28 compared to my intrinsic value of MYR22.78. Not the best news for investors looking to buy! Another thing to keep in mind is that Malaysian Pacific Industries Berhad’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 growth from Malaysian Pacific Industries Berhad?

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. Malaysian Pacific Industries Berhad'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? It seems like the market has well and truly priced in MPI’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe MPI 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 MPI 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 optimistic prospect is encouraging for MPI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Malaysian Pacific Industries Berhad as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that Malaysian Pacific Industries Berhad has 1 warning sign and it would be unwise to ignore this.

If you are no longer interested in Malaysian Pacific Industries 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.