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Should You Investigate Frencken Group Limited (SGX:E28) At S$0.64?

Simply Wall St

Frencken Group Limited (SGX:E28), which is in the machinery business, and is based in Malaysia, saw significant share price movement during recent months on the SGX, rising to highs of SGD0.73 and falling to the lows of SGD0.59. 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 Frencken Group's current trading price of SGD0.64 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 Frencken 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 Frencken Group

Is Frencken Group still cheap?

Good news, investors! Frencken Group is still a bargain right now. According to my valuation, the intrinsic value for the stock is SGD0.83, but it is currently trading at S$0.64 on the share market, meaning that there is still an opportunity to buy now. However, given that Frencken 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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Frencken Group look like?

SGX:E28 Past and Future Earnings, September 9th 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Frencken Group, it is expected to deliver a relatively unexciting earnings growth of 5.3%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since E28 is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on E28 for a while, now might be the time to enter the stock. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy E28. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

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

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.

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. Thank you for reading.