Keppel Telecommunications & Transportation Ltd (SGX:K11), a logistics company based in Singapore, saw significant share price volatility over the past couple of months on the SGX, rising to the highs of SGD1.71 and falling to the lows of SGD1.53. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Keppel Telecommunications & Transportation’s current trading price of SGD1.54 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Keppel Telecommunications & Transportation’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Keppel Telecommunications & Transportation

Is Keppel Telecommunications & Transportation still cheap?

Keppel Telecommunications & Transportation appears to be overvalued by 69% at the moment, based on my discounted cash flow valuation. The stock is currently priced at S$1.54 on the market compared to my intrinsic value of SGD0.91. This means that the opportunity to buy Keppel Telecommunications & Transportation at a good price has disappeared! Another thing to keep in mind is that Keppel Telecommunications & Transportation’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What kind of growth will Keppel Telecommunications & Transportation generate?

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. 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. Though in the case of Keppel Telecommunications & Transportation, it is expected to deliver a relatively unexciting earnings growth of 2.34%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? K11’s future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe K11 should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.