Henderson Land Development Company Limited (HKG:12) saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Henderson Land Development’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for Henderson Land Development
What's The Opportunity In Henderson Land Development?
According to our valuation model, the stock is currently overvalued by about 24%, trading at HK$25.10 compared to our intrinsic value of HK$20.25. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Since Henderson Land Development’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Henderson Land Development generate?
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. With profit expected to more than double over the next couple of years, the future seems bright for Henderson Land Development. 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? 12’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe 12 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 12 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 12, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you want to dive deeper into Henderson Land Development, you'd also look into what risks it is currently facing. For instance, we've identified 3 warning signs for Henderson Land Development (1 is a bit unpleasant) you should be familiar with.
If you are no longer interested in Henderson Land Development, 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.