Is O-Net Technologies (Group) Limited (HKG:877) Potentially Undervalued?
O-Net Technologies (Group) Limited (HKG:877), which is in the communications business, and is based in China, saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on O-Net Technologies (Group)’s outlook and valuation to see if the opportunity still exists.
Check out our latest analysis for O-Net Technologies (Group)
Is O-Net Technologies (Group) still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.36% above my intrinsic value, which means if you buy O-Net Technologies (Group) today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is HK$3.42, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since O-Net Technologies (Group)’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 O-Net Technologies (Group) generate?
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. 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. With profit expected to grow by 29% over the next couple of years, the future seems bright for O-Net Technologies (Group). 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? It seems like the market has already priced in 877’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on 877, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, 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 O-Net Technologies (Group). You can find everything you need to know about O-Net Technologies (Group) in the latest infographic research report. If you are no longer interested in O-Net Technologies (Group), 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.
