While Malaysian Pacific Industries Berhad (KLSE:MPI) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the KLSE over the last few months. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Malaysian Pacific Industries Berhad’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for Malaysian Pacific Industries Berhad
Is Malaysian Pacific Industries Berhad Still Cheap?
Malaysian Pacific Industries Berhad appears to be overvalued by 31% at the moment, based on my discounted cash flow valuation. The stock is currently priced at RM30.00 on the market compared to my intrinsic value of MYR22.84. This means that the opportunity to buy Malaysian Pacific Industries Berhad at a good price has disappeared! But, is there another opportunity to buy low in the future? Since Malaysian Pacific Industries Berhad’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Malaysian Pacific Industries Berhad 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. With profit expected to more than double over the next couple of years, the future seems bright for Malaysian Pacific Industries Berhad. 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 well and truly priced in MPI’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe MPI 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.
Are you a potential investor? If you’ve been keeping tabs on MPI for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for MPI, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.