What Is China Motor Corporation's (TPE:2204) Share Price Doing?

China Motor Corporation (TPE:2204), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the TSEC over the last few months, increasing to NT$53.30 at one point, and dropping to the lows of NT$45.00. 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 China Motor's current trading price of NT$47.00 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 China Motor’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for China Motor

Is China Motor still cheap?

According to my valuation model, China Motor seems to be fairly priced at around 18.62% above my intrinsic value, which means if you buy China Motor today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth NT$39.62, there’s only an insignificant downside when the price falls to its real value. In addition to this, China Motor has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from China Motor?

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 China Motor, it is expected to deliver a relatively unexciting top-line growth of 3.2% over the next year, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? It seems like the market has already priced in 2204’s future outlook, with shares trading around its fair value. 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 the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on 2204, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook 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.

If you'd like to know more about China Motor as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for China Motor and you'll want to know about it.

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This article by Simply Wall St is general in nature. 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.
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