February Insights Into Retail Stocks: Imperium Group Global Holdings Limited (HKG:776)
Imperium Group Global Holdings Limited (SEHK:776), a HK$1.38B small-cap, is a retail company operating in an industry which has experienced a structural shift in terms of digitalization. Looking at trends for growth in macroeconomic factors such as inflation and interest rates are important when thinking about investing in retailers. Retail analysts are forecasting for the entire industry, a positive double-digit growth of 17.71% in the upcoming year , and an enormous growth of 48.00% over the next couple of years. This rate is larger than the growth rate of the Hong Kong stock market as a whole. I’ll take you through the retail sector growth expectations, and also determine whether Imperium Group Global Holdings is a laggard or leader relative to its retail peers. View our latest analysis for Imperium Group Global Holdings
What’s the catalyst for Imperium Group Global Holdings’s sector growth?
E-retailing is expected to remain the fastest growing sales channel, shifting the retail landscape. Significant number of retail store closures and bankruptcies were an indication of both changing consumer preferences and rising online competition. In the past year, the industry delivered growth in the teens, though still underperforming the wider Hong Kong stock market. Imperium Group Global Holdings lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook seems uncertain, with a lack of analyst coverage, which doesn’t boost our confidence in the stock. This lack of growth and transparency means Imperium Group Global Holdings may be trading cheaper than its peers.
Is Imperium Group Global Holdings and the sector relatively cheap?
The retail industry is trading at a PE ratio of 16.5x, relatively similar to the rest of the Hong Kong stock market PE of 14.2x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. Furthermore, the industry returned a similar 9.62% on equities compared to the market’s 10.13%. Since Imperium Group Global Holdings’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Imperium Group Global Holdings’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:
Imperium Group Global Holdings has been a retail industry laggard in the past year. If Imperium Group Global Holdings has been on your watchlist for a while, now may be a good time to dig deeper into the stock. Although it delivered lower growth relative to its retail peers in the near term, the market may be pessimistic on the stock, leading to a potential undervaluation. However, before you make a decision on the stock, I suggest you look at Imperium Group Global Holdings’s fundamentals in order to build a holistic investment thesis.
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Historical Track Record: What has 776’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Imperium Group Global Holdings? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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.
