While MSM Malaysia Holdings Berhad (KLSE:MSM) might not have the largest market cap around , it saw a decent share price growth of 13% on the KLSE over the last few months. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today we will analyse the most recent data on MSM Malaysia Holdings Berhad’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for MSM Malaysia Holdings Berhad
Is MSM Malaysia Holdings Berhad Still Cheap?
MSM Malaysia Holdings Berhad appears to be overvalued by 34% at the moment, based on our discounted cash flow valuation. The stock is currently priced at RM1.20 on the market compared to our intrinsic value of MYR0.90. This means that the buying opportunity has probably disappeared for now. Another thing to keep in mind is that MSM Malaysia Holdings Berhad’s share price is quite stable relative to the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from MSM Malaysia Holdings Berhad?
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 more than double over the next couple of years, the future seems bright for MSM Malaysia Holdings Berhad. 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 well and truly priced in MSM’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe MSM should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.