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Kerry Logistics Network Limited (HKG:636), which is in the logistics business, and is based in Hong Kong, received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$13.62 at one point, and dropping to the lows of HK$8.82. 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 Kerry Logistics Network's current trading price of HK$9.61 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 Kerry Logistics Network’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 Kerry Logistics Network
What's the opportunity in Kerry Logistics Network?
Good news, investors! Kerry Logistics Network is still a bargain right now. According to my valuation, the intrinsic value for the stock is HK$18.45, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Kerry Logistics Network’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
What does the future of Kerry Logistics Network 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. 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Kerry Logistics Network, at least in the near future.
What this means for you:
Are you a shareholder? Although 636 is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to 636, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on 636 for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.