What Does CGN Power Co Ltd’s (HKG:1816) Share Price Indicate?
CGN Power Co Ltd (SEHK:1816) had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of HK$2.06 to HK$2.26. However, is this the true valuation level of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CGN Power’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 CGN Power
Is CGN Power still cheap?
Great news for investors – CGN Power is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is HK$7.63, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, CGN Power’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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 CGN Power generate?
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. Though in the case of CGN Power, it is expected to deliver a negative earnings growth of -2.70%, 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 CGN Power is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to CGN Power, 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 CGN Power for some time, but hesitant on making the leap, I recommend you dig deeper 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 CGN Power. You can find everything you need to know about CGN Power in the latest infographic research report. If you are no longer interested in CGN Power, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
