U.S. Markets closed

At HK$1.46, Is Grand Baoxin Auto Group Limited (HKG:1293) Worth Looking At Closely?

Simply Wall St

Grand Baoxin Auto Group Limited (HKG:1293), which is in the specialty retail business, and is based in China, saw significant share price movement during recent months on the SEHK, rising to highs of HK$1.67 and falling to the lows of HK$1.41. 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 Grand Baoxin Auto Group's current trading price of HK$1.46 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 Grand Baoxin Auto Group’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 Grand Baoxin Auto Group

What's the opportunity in Grand Baoxin Auto Group?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.9% below my intrinsic value, which means if you buy Grand Baoxin Auto Group today, you’d be paying a fair price for it. And if you believe that the stock is really worth HK$1.55, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Grand Baoxin Auto Group’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Grand Baoxin Auto Group look like?

SEHK:1293 Past and Future Earnings, December 2nd 2019

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. Grand Baoxin Auto Group’s earnings over the next few years are expected to increase by 62%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? 1293’s optimistic future growth appears to have been factored into the current share price, 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 conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on 1293, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Grand Baoxin Auto Group. You can find everything you need to know about Grand Baoxin Auto Group in the latest infographic research report. If you are no longer interested in Grand Baoxin Auto Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.