Hong Fok Corporation Limited (SGX:H30), a real estate company based in Singapore, saw significant share price volatility over the past couple of months on the SGX, rising to the highs of SGD0.9 and falling to the lows of SGD0.8. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Hong Fok’s current trading price of SGD0.81 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 Hong Fok’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 Hong Fok
What is Hong Fok worth?Good news, investors! Hong Fok is still a bargain right now. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 3.15x is currently well-below the industry average of 10.52x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Hong Fok’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from Hong Fok?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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Though in the case of Hong Fok, 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? Although H30 is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to H30, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on H30 for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Hong Fok. You can find everything you need to know about Hong Fok in the latest infographic research report. If you are no longer interested in Hong Fok, you can use our free platform to see my list of over 50 other stocks with a high growth potential.