Zhejiang Expressway Co Ltd (HKG:576), a infrastructure company based in China, received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$8.67 at one point, and dropping to the lows of HK$7.36. 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 Zhejiang Expressway’s current trading price of HK$7.37 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 Zhejiang Expressway’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 Zhejiang Expressway
Is Zhejiang Expressway still cheap?
Great news for investors – Zhejiang Expressway is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is HK$23.05, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Zhejiang Expressway’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 Zhejiang Expressway generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Though in the case of Zhejiang Expressway, it is expected to deliver a relatively unexciting earnings growth of 5.45%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What this means for you:
Are you a shareholder? Even though growth is relatively muted, since 576 is currently undervalued, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on 576 for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 576. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Zhejiang Expressway. You can find everything you need to know about Zhejiang Expressway in the latest infographic research report. If you are no longer interested in Zhejiang Expressway, 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.