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Is Now An Opportune Moment To Examine Industrial and Commercial Bank of China Limited (HKG:1398)?

Matthew Smith

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Let’s talk about the popular Industrial and Commercial Bank of China Limited (HKG:1398). The company’s shares saw a decent share price growth in the teens level on the SEHK over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Industrial and Commercial Bank of China’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for Industrial and Commercial Bank of China

What’s the opportunity in Industrial and Commercial Bank of China?

Good news, investors! Industrial and Commercial Bank of China is still a bargain right now. My valuation model shows that the intrinsic value for the stock is HK$10.98, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Industrial and Commercial Bank of China’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.

Can we expect growth from Industrial and Commercial Bank of China?

SEHK:1398 Future Profit February 15th 19

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. With profit expected to grow by a double-digit 14% over the next couple of years, the outlook is positive for Industrial and Commercial Bank of China. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since 1398 is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on 1398 for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 1398. 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 Industrial and Commercial Bank of China. You can find everything you need to know about Industrial and Commercial Bank of China in the latest infographic research report. If you are no longer interested in Industrial and Commercial Bank of China, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.