What Is Sino-Ocean Group Holding Limited's (HKG:3377) Share Price Doing?
Sino-Ocean Group Holding Limited (HKG:3377), which is in the real estate 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$3.25 at one point, and dropping to the lows of HK$1.95. 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 Sino-Ocean Group Holding's current trading price of HK$1.96 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Sino-Ocean Group Holding’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 Sino-Ocean Group Holding
What is Sino-Ocean Group Holding worth?
According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Sino-Ocean Group Holding’s ratio of 5.13x is trading slightly below its industry peers’ ratio of 6.25x, which means if you buy Sino-Ocean Group Holding today, you’d be paying a reasonable price for it. And if you believe that Sino-Ocean Group Holding should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. So, is there another chance to buy low in the future? Given that Sino-Ocean Group Holding’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Sino-Ocean Group Holding generate?
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. 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. Sino-Ocean Group Holding’s earnings over the next few years are expected to increase by 52%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in 3377’s positive outlook, with shares trading around industry price multiples. 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 3377? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?
Are you a potential investor? If you’ve been keeping an eye on 3377, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for 3377, which means it’s worth further examining 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 Sino-Ocean Group Holding. You can find everything you need to know about Sino-Ocean Group Holding in the latest infographic research report. If you are no longer interested in Sino-Ocean Group Holding, 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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