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Harbin Bank Co., Ltd. (HKG:6138), operating in the financial services industry based in China, saw significant share price movement during recent months on the SEHK, rising to highs of HK$1.66 and falling to the lows of HK$1.39. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Harbin Bank's current trading price of HK$1.45 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 Harbin Bank’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Harbin Bank
Is Harbin Bank still cheap?
According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Harbin Bank’s ratio of 2.82x is trading slightly below its industry peers’ ratio of 6.17x, which means if you buy Harbin Bank today, you’d be paying a fair price for it. And if you believe Harbin Bank should be trading in this range, then there isn’t much room for the share price grow beyond where it’s currently trading. In addition to this, it seems like Harbin Bank’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Harbin Bank 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 29% over the next couple of years, the future seems bright for Harbin Bank. 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? 6138’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 track record of its management team. Have these factors changed since the last time you looked at 6138? Will you have enough conviction to buy should the price fluctuate below the true value?