Today we’re going to take a look at the well-established China Resources Land Limited (SEHK:1109). The company’s stock led the SEHK gainers with a relatively large price hike in the past couple of weeks. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine China Resources Land’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. View our latest analysis for China Resources Land

What’s the opportunity in China Resources Land?

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 11.66x is currently trading slightly above its industry peers’ ratio of 8.01x, which means if you buy China Resources Land today, you’d be paying a relatively reasonable price for it. And if you believe that China Resources Land 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 China Resources Land’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 does the future of China Resources Land look like?

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 profit expected to grow by 94.61% over the next couple of years, the future seems bright for China Resources Land. It looks like higher cash flows 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 1109’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 track record of its management team. Have these factors changed since the last time you looked at 1109? Will you have enough confidence to invest in the company should the price drop below its fair value?