Health Management International Ltd (SGX:588), a healthcare company based in Singapore, saw significant share price volatility over the past couple of months on the SGX, rising to the highs of SGD0.68 and falling to the lows of SGD0.60. 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 Health Management International’s current trading price of SGD0.60 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Health Management International’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View out our latest analysis for Health Management International
What is Health Management International worth?
Great news for investors – Health Management International is still trading at a fairly cheap price. In this instance, I’ve used the price-to-equity (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Health Management International’s ratio of 26.31x is below its peer average of 32.78x, which suggests the stock is undervalued compared to the Healthcare industry. What’s more interesting is that, Health Management International’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Health Management International 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 grow by 31.39% over the next couple of years, the future seems bright for Health Management International. 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? Since 588 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.