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Zhongsheng Group Holdings Limited (HKG:881), which is in the specialty retail business, and is based in China, saw a significant share price rise of over 20% in the past couple of months on the SEHK. 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, what if the stock is still a bargain? Today I will analyse the most recent data on Zhongsheng Group Holdings’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for Zhongsheng Group Holdings
Is Zhongsheng Group Holdings still cheap?
Great news for investors – Zhongsheng Group Holdings is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is HK$25.38, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Although, there may be another chance to buy again in the future. This is because Zhongsheng Group Holdings’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of Zhongsheng Group Holdings look like?
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. With profit expected to grow by 30% over the next couple of years, the future seems bright for Zhongsheng Group Holdings. 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? Since 881 is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on 881 for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 881. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.