Kaisa Group Holdings Ltd. (HKG:1638), which is in the real estate business, and is based in China, saw a decent share price growth in the teens level on the SEHK over the last few months. As a HK$21b market cap stock, it seems odd Kaisa Group Holdings is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Kaisa Group Holdings’s outlook and value based on the most recent financial data to see if the opportunity still exists.
What's the opportunity in Kaisa Group Holdings?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 2.2% below my intrinsic value, which means if you buy Kaisa Group Holdings today, you’d be paying a fair price for it. And if you believe that the stock is really worth HK$3.49, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because Kaisa Group Holdings’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Kaisa Group Holdings look like?
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. With profit expected to grow by 49% over the next couple of years, the future seems bright for Kaisa Group Holdings. 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 1638’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 conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on 1638, now may not be the most advantageous 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 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 Kaisa Group Holdings. You can find everything you need to know about Kaisa Group Holdings in the latest infographic research report. If you are no longer interested in Kaisa Group Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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