In This Article:
Plover Bay Technologies Limited (HKG:1523), which is in the communications business, and is based in Hong Kong, saw significant share price movement during recent months on the SEHK, rising to highs of HK$1.30 and falling to the lows of HK$1.05. 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 Plover Bay Technologies's current trading price of HK$1.10 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 Plover Bay Technologies’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 Plover Bay Technologies
Is Plover Bay Technologies still cheap?
The stock seems fairly valued at the moment according to my relative valuation model. 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 Plover Bay Technologies’s ratio of 12.4x is trading slightly below its industry peers’ ratio of 13.08x, which means if you buy Plover Bay Technologies today, you’d be paying a fair price for it. And if you believe Plover Bay Technologies should be trading in this range, then there isn’t much room for the share price grow beyond where it’s currently trading. So, is there another chance to buy low in the future? Given that Plover Bay Technologies’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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Plover Bay Technologies 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. 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 revenues expected to grow by 50% over the next couple of years, the future seems bright for Plover Bay Technologies. If the level of expenses is able to be maintained, 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? 1523’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 financial strength of the company. Have these factors changed since the last time you looked at 1523? Will you have enough conviction to buy should the price fluctuate below the true value?