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At HK$2.22, Is It Time To Put COSCO SHIPPING Holdings Co., Ltd. (HKG:1919) On Your Watch List?

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Simply Wall St
·4 min read
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COSCO SHIPPING Holdings Co., Ltd. (HKG:1919), which is in the shipping business, and is based in China, received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$3.32 at one point, and dropping to the lows of HK$2.03. 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 COSCO SHIPPING Holdings's current trading price of HK$2.22 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at COSCO SHIPPING Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for COSCO SHIPPING Holdings

What's the opportunity in COSCO SHIPPING Holdings?

Great news for investors – COSCO SHIPPING Holdings is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 2.95x is currently well-below the industry average of 11.6x, meaning that it is trading at a cheaper price relative to its peers. Although, there may be another chance to buy again in the future. This is because COSCO SHIPPING Holdings’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of COSCO SHIPPING Holdings look like?

SEHK:1919 Past and Future Earnings April 13th 2020
SEHK:1919 Past and Future Earnings April 13th 2020

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 COSCO SHIPPING Holdings, it is expected to deliver a highly negative earnings growth in the next few years, 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 1919 is currently trading below the industry PE ratio, the negative profit outlook does bring on some uncertainty, which equates to higher risk. I recommend you think about whether you want to increase your portfolio exposure to 1919, 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 an eye on 1919 for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, 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 COSCO SHIPPING Holdings. You can find everything you need to know about COSCO SHIPPING Holdings in the latest infographic research report. If you are no longer interested in COSCO SHIPPING Holdings, 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.