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Is It Time To Consider Buying Sun Hung Kai Properties Limited (HKG:16)?

Simply Wall St

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Today we're going to take a look at the well-established Sun Hung Kai Properties Limited (HKG:16). The company's stock saw significant share price movement during recent months on the SEHK, rising to highs of HK$141.6 and falling to the lows of HK$123.5. 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 Sun Hung Kai Properties's current trading price of HK$125.9 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 Sun Hung Kai Properties’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 Sun Hung Kai Properties

What is Sun Hung Kai Properties worth?

According to my valuation model, Sun Hung Kai Properties seems to be fairly priced at around 18.66% above my intrinsic value, which means if you buy Sun Hung Kai Properties today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is HK$106.1, then there isn’t really any room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Sun Hung Kai Properties’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 does the future of Sun Hung Kai Properties look like?

SEHK:16 Past and Future Earnings, June 17th 2019

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 Sun Hung Kai Properties, it is expected to deliver a negative earnings growth of -0.9%, 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? 16 seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on 16 for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on 16 should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Sun Hung Kai Properties. You can find everything you need to know about Sun Hung Kai Properties in the latest infographic research report. If you are no longer interested in Sun Hung Kai Properties, 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.