Is Beijing Capital International Airport Company Limited (HKG:694) Potentially Undervalued?

Beijing Capital International Airport Company Limited (HKG:694), which is in the infrastructure business, and is based in China, received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$7 at one point, and dropping to the lows of HK$5.94. 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 Beijing Capital International Airport's current trading price of HK$5.94 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Beijing Capital International Airport’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Beijing Capital International Airport

Is Beijing Capital International Airport still cheap?

According to my valuation model, Beijing Capital International Airport seems to be fairly priced at around 10.63% above my intrinsic value, which means if you buy Beijing Capital International Airport today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is HK$5.37, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Beijing Capital International Airport’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Beijing Capital International Airport 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. 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 Beijing Capital International Airport, at least in the near future.

What this means for you:

Are you a shareholder? Currently, 694 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 optimal 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 tabs on 694 for a while, now may not be the most advantageous 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 694 should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Beijing Capital International Airport. You can find everything you need to know about Beijing Capital International Airport in the latest infographic research report. If you are no longer interested in Beijing Capital International Airport, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.