Regal Real Estate Investment Trust (SEHK:1881), a reits company based in Hong Kong, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of HK$2.35 to HK$2.43. However, is this the true valuation level of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Regal Real Estate Investment Trust’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 Regal Real Estate Investment Trust
What’s the opportunity in Regal Real Estate Investment Trust?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 19% above my intrinsic value, which means if you buy Regal Real Estate Investment Trust today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth HK$2.04, there’s only an insignificant downside when the price falls to its real value. Furthermore, it seems like Regal Real Estate Investment Trust’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Regal Real Estate Investment Trust look like?
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. 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Regal Real Estate Investment Trust, at least in the near future.
What this means for you:
Are you a shareholder? Regal Real Estate Investment Trust seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal 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 an eye on Regal Real Estate Investment Trust 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 crystalize your views on Regal Real Estate Investment Trust should the price fluctuate below its true value.