When Should You Buy Kronologi Asia Berhad (KLSE:KRONO)?

Kronologi Asia Berhad (KLSE:KRONO), is not the largest company out there, but it saw a decent share price growth in the teens level on the KLSE over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Kronologi Asia Berhad’s outlook and valuation to see if the opportunity still exists.

Our analysis indicates that KRONO is potentially undervalued!

Is Kronologi Asia Berhad Still Cheap?

According to my valuation model, Kronologi Asia Berhad seems to be fairly priced at around 14% below my intrinsic value, which means if you buy Kronologi Asia Berhad today, you’d be paying a fair price for it. And if you believe that the stock is really worth MYR0.53, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Kronologi Asia Berhad’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 Kronologi Asia Berhad 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. Though in the case of Kronologi Asia Berhad, it is expected to deliver a negative earnings growth of -2.2%, 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? Currently, KRONO appears to be trading around its fair value, 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 an eye on KRONO 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 gel your views on KRONO should the price fluctuate below its true value.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. At Simply Wall St, we found 2 warning signs for Kronologi Asia Berhad and we think they deserve your attention.

If you are no longer interested in Kronologi Asia 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.