Man Wah Holdings Limited (SEHK:1999), a consumer durables company based in Hong Kong, saw significant share price volatility over the past couple of months on the SEHK, rising to the highs of HK$8.6 and falling to the lows of HK$6.45. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Man Wah Holdings’s current trading price of HK$7.02 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 Man Wah Holdings’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 Man Wah Holdings
What’s the opportunity in Man Wah Holdings?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 19% above my intrinsic value, which means if you buy Man Wah Holdings today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is HK$5.9, there’s only an insignificant downside when the price falls to its real value. In addition to this, it seems like Man Wah Holdings’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from Man Wah Holdings?
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. Man Wah Holdings’s earnings over the next few years are expected to increase by 34.53%, 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 Man Wah Holdings’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on Man Wah Holdings, now may not be the most advantageous 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 further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.