Chow Tai Fook Jewellery Group Limited (SEHK:1929) received a lot of attention from a substantial price movement on the SEHK in the over the last few months, increasing to HK$9.41 at one point, and dropping to the lows of HK$8.1. 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 1929’s current trading price of HK$8.15 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at 1929’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 1929
Is 1929 still cheap?
1929 appears to be overvalued by 66% at the moment, based on my discounted cash flow valuation. The stock is currently priced at HK$8.15 on the market compared to my intrinsic value of HK$4.9. Not the best news for investors looking to buy! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that 1929’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from 1929?
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. 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 1929 future expectations. With profit expected to grow by 32.92% over the next couple of years, the future seems bright for 1929. It looks like higher cash flows 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 1929’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 1929 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 an eye on 1929 for a while, 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 positive outlook is encouraging for 1929, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.