At RM0.75, Is Tiong Nam Logistics Holdings Berhad (KLSE:TNLOGIS) Worth Looking At Closely?

Tiong Nam Logistics Holdings Berhad (KLSE:TNLOGIS), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the KLSE over the last few months, increasing to RM0.96 at one point, and dropping to the lows of RM0.75. 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 Tiong Nam Logistics Holdings Berhad's current trading price of RM0.75 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 Tiong Nam Logistics 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 Tiong Nam Logistics Holdings Berhad

Is Tiong Nam Logistics Holdings Berhad still cheap?

The share price seems sensible at the moment according to my price multiple model, where I compare 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 Tiong Nam Logistics Holdings Berhad’s ratio of 25.72x is trading slightly below its industry peers’ ratio of 27.09x, which means if you buy Tiong Nam Logistics Holdings Berhad today, you’d be paying a reasonable price for it. And if you believe Tiong Nam Logistics 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 Tiong Nam Logistics 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 does the future of Tiong Nam Logistics Holdings Berhad 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. With profit expected to more than double over the next couple of years, the future seems bright for Tiong Nam Logistics Holdings Berhad. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has already priced in TNLOGIS’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at TNLOGIS? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on TNLOGIS, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for TNLOGIS, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Our analysis shows 4 warning signs for Tiong Nam Logistics Holdings Berhad (1 shouldn't be ignored!) and we strongly recommend you look at them before investing.

If you are no longer interested in Tiong Nam Logistics 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.