Swire Pacific Limited (HKG:19) saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. The recent share price gains has brought the company back closer to 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. But what if there is still an opportunity to buy? Today we will analyse the most recent data on Swire Pacific’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for Swire Pacific
Is Swire Pacific Still Cheap?
According to our valuation model, Swire Pacific seems to be fairly priced at around 12% below our intrinsic value, which means if you buy Swire Pacific today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth HK$79.84, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Swire Pacific’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What does the future of Swire Pacific look like?
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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Swire Pacific, at least in the near future.
What This Means For You
Are you a shareholder? Currently, 19 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 beneficial 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 19 for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, 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 19 should the price fluctuate below its true value.
If you want to dive deeper into Swire Pacific, you'd also look into what risks it is currently facing. To help with this, we've discovered 3 warning signs (1 doesn't sit too well with us!) that you ought to be aware of before buying any shares in Swire Pacific.
If you are no longer interested in Swire Pacific, 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.