Is Now The Time To Look At Buying Luk Fook Holdings (International) Limited (HKG:590)?
Luk Fook Holdings (International) Limited (HKG:590), which is in the specialty retail business, and is based in Hong Kong, led the SEHK gainers with a relatively large price hike in the past couple of weeks. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Today I will analyse the most recent data on Luk Fook Holdings (International)’s outlook and valuation to see if the opportunity still exists.
View our latest analysis for Luk Fook Holdings (International)
What is Luk Fook Holdings (International) worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 7.2% below my intrinsic value, which means if you buy Luk Fook Holdings (International) today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth HK$25.60, then there’s not much of an upside to gain from mispricing. In addition to this, Luk Fook Holdings (International) has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will Luk Fook Holdings (International) generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. With profit expected to grow by a double-digit 16% over the next couple of years, the outlook is positive for Luk Fook Holdings (International). 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? 590’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on 590, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Luk Fook Holdings (International). You can find everything you need to know about Luk Fook Holdings (International) in the latest infographic research report. If you are no longer interested in Luk Fook Holdings (International), you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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.
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