Location, Location, Location: Grand Field Group Holdings Limited (HKG:115)’s Relative Position In The Real Estate Sector
Grand Field Group Holdings Limited (SEHK:115), a HK$296.21M small-cap, is a real estate company operating in an industry which remains the single largest sector globally, and has continued to play a key role in investor portfolios. Real estate analysts are forecasting for the entire industry, a somewhat weaker growth of 0.31% in the upcoming year , and an optimistic near-term growth of 10.38% over the next couple of years. However, this rate came in below the growth rate of the Hong Kong stock market as a whole. Today, I’ll take you through the real estate sector outlook, and also determine whether Grand Field Group Holdings is a laggard or leader relative to its real estate sector peers. View our latest analysis for Grand Field Group Holdings
What’s the catalyst for Grand Field Group Holdings’s sector growth?
Not every category of real estate is likely to be impacted the same by macroeconomic factors such as interest rate hikes, and not all locations are primed to grow. So, investors must remain cautiously optimistic and analyse the fundamentals of the underlying industry. In the past year, the industry delivered growth in the twenties, beating the Hong Kong market growth of 11.19%. Grand Field Group Holdings lags the pack with its negative growth rate of -93.79% over the past year, which indicates the company will be growing at a slower pace than its real estate peers. As the company trails the rest of the industry in terms of growth, Grand Field Group Holdings may also be a cheaper stock relative to its peers.
Is Grand Field Group Holdings and the sector relatively cheap?
The real estate sector’s PE is currently hovering around 8.82x, in-line with the Hong Kong stock market PE of 13.75x. 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 7.99% on equities compared to the market’s 9.57%. On the stock-level, Grand Field Group Holdings is trading at a PE ratio of 6.61x, which is relatively in-line with the average real estate stock. In terms of returns, Grand Field Group Holdings generated 5.89% in the past year, which is 2.11% below the real estate sector.
Next Steps:
Grand Field Group Holdings has been a real estate industry laggard in the past year. It delivered lower earnings growth compared to its peers in the near term, and it is also trading at a PE in-line with these companies. If growth and mispricing are important aspects for your investment thesis, there may be better investments in the real estate sector. However, before you make a decision on the stock, I suggest you look at Grand Field Group 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 115’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 Grand Field Group 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.
