China SCE Property Holdings Limited (SEHK:1966), a real estate company based in China, saw a decent share price growth in the teens level on the SEHK over the last few months. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine China SCE Property Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for China SCE Property Holdings

What is China SCE Property Holdings worth?

According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 4.3x is currently trading slightly below its industry peers’ ratio of 7.3x, which means if you buy China SCE Property Holdings today, you’d be paying a reasonable price for it. And if you believe China SCE Property Holdings should be trading in this range, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, it seems like China SCE Property Holdings’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.

Can we expect growth from China SCE Property Holdings?

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. China SCE Property Holdings’s earnings over the next few years are expected to increase by 41.67%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in 1966’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 track record of its management team. Have these factors changed since the last time you looked at 1966? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on 1966, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for 1966, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.