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Is Now An Opportune Moment To Examine Red Star Macalline Group Corporation Ltd. (HKG:1528)?

Simply Wall St

Red Star Macalline Group Corporation Ltd. (HKG:1528), which is in the real estate business, and is based in China, saw significant share price movement during recent months on the SEHK, rising to highs of HK$6.86 and falling to the lows of HK$5.68. 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 Red Star Macalline Group's current trading price of HK$5.80 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 Red Star Macalline Group’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 Red Star Macalline Group

What is Red Star Macalline Group worth?

According to my valuation model, the stock is currently overvalued by about 29%, trading at HK$5.80 compared to my intrinsic value of HK$4.49. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Red Star Macalline Group’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Red Star Macalline Group generate?

SEHK:1528 Past and Future Earnings, March 8th 2020

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. Red Star Macalline Group’s earnings over the next few years are expected to increase by 51%, 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? It seems like the market has well and truly priced in 1528’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe 1528 should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on 1528 for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for 1528, which means it’s worth diving deeper into other factors 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 Red Star Macalline Group. You can find everything you need to know about Red Star Macalline Group in the latest infographic research report. If you are no longer interested in Red Star Macalline 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.