In This Article:
Today we’re going to take a look at the well-established China Overseas Land & Investment Limited (HKG:688). The company’s stock saw a double-digit share price rise of over 10% in the past couple of months on the SEHK. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at China Overseas Land & Investment’s outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for China Overseas Land & Investment
What is China Overseas Land & Investment worth?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 6.52x is currently trading slightly above its industry peers’ ratio of 6.33x, which means if you buy China Overseas Land & Investment today, you’d be paying a relatively fair price for it. And if you believe that China Overseas Land & Investment should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. In addition to this, it seems like China Overseas Land & Investment’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 kind of growth will China Overseas Land & Investment generate?
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 28.9% over the next couple of years, the future seems bright for China Overseas Land & Investment. 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? It seems like the market has already priced in 688’s positive outlook, 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 688? Will you have enough conviction to buy should the price fluctuate below the true value?