Is There Now An Opportunity In Link Real Estate Investment Trust (HKG:823)?
Today we’re going to take a look at the well-established Link Real Estate Investment Trust (SEHK:823). The company’s stock saw its share price hover around a small range of HK$64.7 to HK$69.95 over the last few weeks. But is this actually reflective of the share value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Link Real Estate Investment Trust’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 Link Real Estate Investment Trust
What’s the opportunity in Link Real Estate Investment Trust?
Link Real Estate Investment Trust appears to be overvalued by 33% at the moment, based on my discounted cash flow valuation. The stock is currently priced at HK$66.60 on the market compared to my intrinsic value of HK$50.15. This means that the buying opportunity has probably disappeared for now. In addition to this, it seems like Link Real Estate Investment Trust’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from Link Real Estate Investment Trust?
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 Link Real Estate Investment Trust, 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? If you believe 823 is currently trading above its value, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to de-risk your portfolio. 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 an eye on 823 for a while, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the track record of its management. Should the price fall in the future, will you be well-informed enough to buy?
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Link Real Estate Investment Trust. You can find everything you need to know about Link Real Estate Investment Trust in the latest infographic research report. If you are no longer interested in Link Real Estate Investment Trust, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.
