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CK Asset Holdings Limited (HKG:1113) received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$62.8 at one point, and dropping to the lows of HK$50.15. 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 CK Asset Holdings's current trading price of HK$54.1 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 CK Asset Holdings’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 CK Asset Holdings
What is CK Asset Holdings worth?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 6.55x is currently trading slightly above its industry peers’ ratio of 6.16x, which means if you buy CK Asset Holdings today, you’d be paying a relatively reasonable price for it. And if you believe that CK Asset Holdings should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since CK Asset Holdings’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will CK Asset Holdings 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. However, with a negative profit growth of -17% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for CK Asset Holdings. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? 1113 seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on 1113, take a look at whether its fundamentals have changed.