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Alibaba Pictures Group Limited (HKG:1060), which is in the entertainment business, and is based in Hong Kong, led the SEHK gainers with a relatively large price hike in the past couple of weeks. As a HK$38b market-cap stock, it seems odd Alibaba Pictures Group is not more well-covered by analysts. Although, there is more of an opportunity for mispricing in stocks with low coverage, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s take a look at Alibaba Pictures Group’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Alibaba Pictures Group

What is Alibaba Pictures Group worth?

The stock is currently trading at HK$1.45 on the share market, which means it is overvalued by 48.24% compared to my intrinsic value of HK$0.98. This means that the opportunity to buy Alibaba Pictures Group at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Alibaba Pictures Group’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 does the future of Alibaba Pictures Group look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 68% over the next year, the near-term future seems bright for Alibaba Pictures 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? 1060’s optimistic 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 1060 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.