In This Article:
China Harmony New Energy Auto Holding Limited (HKG:3836), which is in the specialty retail business, and is based in China, saw significant share price movement during recent months on the SEHK, rising to highs of HK$4.35 and falling to the lows of HK$3.29. 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 China Harmony New Energy Auto Holding's current trading price of HK$3.34 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 China Harmony New Energy Auto Holding’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for China Harmony New Energy Auto Holding
What is China Harmony New Energy Auto Holding worth?
The share price seems sensible at the moment according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. 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 China Harmony New Energy Auto Holding’s ratio of 8.34x is trading slightly below its industry peers’ ratio of 11.08x, which means if you buy China Harmony New Energy Auto Holding today, you’d be paying a decent price for it. And if you believe that China Harmony New Energy Auto Holding should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. So, is there another chance to buy low in the future? Given that China Harmony New Energy Auto Holding’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.
Can we expect growth from China Harmony New Energy Auto Holding?
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. China Harmony New Energy Auto Holding’s earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.