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What Is Sino-Ocean Group Holding Limited's (HKG:3377) Share Price Doing?

Simply Wall St

Sino-Ocean Group Holding Limited (HKG:3377), which is in the real estate business, and is based in China, received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$3.49 at one point, and dropping to the lows of HK$2.62. 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 Sino-Ocean Group Holding's current trading price of HK$2.66 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 Sino-Ocean Group Holding’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Sino-Ocean Group Holding

Is Sino-Ocean Group Holding still cheap?

According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 5.89x is currently trading slightly below its industry peers’ ratio of 6.07x, which means if you buy Sino-Ocean Group Holding today, you’d be paying a fair price for it. And if you believe that Sino-Ocean Group Holding should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Sino-Ocean Group Holding’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Sino-Ocean Group Holding generate?

SEHK:3377 Past and Future Earnings, October 1st 2019

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 76% over the next couple of years, the future seems bright for Sino-Ocean Group Holding. 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 3377’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 track record of its management team. Have these factors changed since the last time you looked at 3377? Will you have enough conviction to buy should the price fluctuate below the true value?

Are you a potential investor? If you’ve been keeping an eye on 3377, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic forecast is encouraging for 3377, which means it’s worth diving deeper into 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 Sino-Ocean Group Holding. You can find everything you need to know about Sino-Ocean Group Holding in the latest infographic research report. If you are no longer interested in Sino-Ocean Group Holding, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

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.

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. Thank you for reading.