Dali Foods Group Company Limited (HKG:3799), which is in the food business, and is based in Hong Kong, saw significant share price volatility over the past couple of months on the SEHK, rising to the highs of HK$6.82 and falling to the lows of HK$5.45. 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 Dali Foods Group’s current trading price of HK$5.63 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Dali Foods Group’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 Dali Foods Group

What’s the opportunity in Dali Foods Group?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 17.0% below my intrinsic value, which means if you buy Dali Foods Group today, you’d be paying a fair price for it. And if you believe that the stock is really worth HK$6.79, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Dali Foods Group’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. 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 does the future of Dali Foods Group 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. 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 28.2% over the next couple of years, the future seems bright for Dali Foods 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? 3799’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 financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?