CapitaLand Retail China Trust (SGX:AU8U), a reits company based in Singapore, saw its share price hover around a small range of SGD1.53 to SGD1.61 over the last few weeks. But is this actually reflective of the share value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CapitaLand Retail China Trust’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 CapitaLand Retail China Trust
What is CapitaLand Retail China Trust worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 13.27% below my intrinsic value, which means if you buy CapitaLand Retail China Trust today, you’d be paying a fair price for it. And if you believe that the stock is really worth SGD1.81, then there’s not much of an upside to gain from mispricing. In addition to this, it seems like CapitaLand Retail China Trust’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 does the future of CapitaLand Retail China Trust look like?
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. Though in the case of CapitaLand Retail China Trust, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Currently, AU8U appears to be trading around its fair value, 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 the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on AU8U for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on AU8U should the price fluctuate below its true value.