Crystal International Group Limited (HKG:2232), which is in the luxury business, and is based in Hong Kong, saw its share price hover around a small range of HK$3.00 to HK$3.28 over the last few weeks. But is this actually reflective of the share value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Crystal International Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Crystal International Group

What's the opportunity in Crystal International Group?

The stock seems fairly valued at the moment according to my relative valuation model. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Crystal International Group’s ratio of 8.18x is trading slightly below its industry peers’ ratio of 9.07x, which means if you buy Crystal International Group today, you’d be paying a fair price for it. And if you believe that Crystal International Group 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 Crystal International Group’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.

Can we expect growth from Crystal International Group?

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 26% over the next couple of years, the future seems bright for Crystal International Group. 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? 2232’s optimistic future growth appears to have been factored into the current share price, 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 2232? Will you have enough conviction to buy should the price fluctuate below the true value?