China Construction Bank Corporation (SEHK:939) saw significant share price volatility over the past couple of months on the SEHK, rising to the highs of HK$8.59 and falling to the lows of HK$7.78. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether China Construction Bank’s current trading price of HK$8.17 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at China Construction Bank’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 China Construction Bank
Is China Construction Bank still cheap?
Great news for investors – China Construction Bank is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is HK$16.11, but it is currently trading at HK$8.17 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, China Construction Bank’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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 China Construction Bank 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. 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 18.13% over the next couple of years, the outlook is positive for China Construction Bank. It looks like higher cash flows 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 939 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 capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on 939 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 939. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on China Construction Bank. You can find everything you need to know about China Construction Bank in the latest infographic research report. If you are no longer interested in China Construction Bank, 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.