In This Article:
Xin Point Holdings Limited (HKG:1571), a HK$3.08b small-cap, operates in the auto industry which is a major player in the economy due to its high commodity consumption. A challenge facing the sector is navigating the path to driverless cars, requiring high capital outlays in technology. Automobile analysts are forecasting for the entire industry, a strong double-digit growth of 22.5% in the upcoming year , and a whopping growth of 91.3% over the next couple of years. This rate is larger than the growth rate of the Hong Kong In this article, I’ll take you through the automobile sector growth expectations, as well as evaluate whether Xin Point Holdings is lagging or leading its competitors in the industry.
View our latest analysis for Xin Point Holdings
What’s the catalyst for Xin Point Holdings’s sector growth?
The increasing presence of tech firms in the auto industry cannot be discounted by OEMs. In the previous year, the industry saw growth in the teens, though still underperforming the wider Hong Kong stock market. Xin Point Holdings leads the pack with its impressive earnings growth of 21.5% over the past year. However, analysts are expecting its future earnings growth to be more in-line with the industry average, hovering at 22.2% over the next couple of years.
Is Xin Point Holdings and the sector relatively cheap?
The automobile industry is trading at a PE ratio of 12.73x, in-line with the Hong Kong stock market PE of 11.62x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a higher 12.3% compared to the market’s 9.5%, potentially illustrative of a turnaround. On the stock-level, Xin Point Holdings is trading at a lower PE ratio of 6.6x, making it cheaper than the average automobile stock. In terms of returns, Xin Point Holdings generated 19.7% in the past year, which is 7.5% over the automobile sector.
Next Steps:
Xin Point Holdings’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. In addition to this, its PE is below its automobile peers, suggesting it is also trading at a relatively cheaper price. Perhaps the market hasn’t fully accounted for the growth, meaning now may be the right time to accumulate more of, or enter into, the stock. However, before you make a decision on the stock, I suggest you look at Xin Point Holdings’s fundamentals in order to build a holistic investment thesis.
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Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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Historical Track Record: What has 1571’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Xin Point Holdings? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.