Ascendas Hospitality Trust (SGX:Q1P), a equity real estate investment trusts (reits) company based in Singapore, maintained its current share price over the past couple of month on the SGX, with a relatively tight range of SGD0.83 to SGD0.9. However, does this price actually reflect the true value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Ascendas Hospitality Trust’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 Ascendas Hospitality Trust
Is Ascendas Hospitality Trust still cheap?
According to my valuation model, Ascendas Hospitality Trust seems to be fairly priced at around 6% above my intrinsic value, which means if you buy Ascendas Hospitality Trust today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is SGD0.8, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, it seems like Ascendas Hospitality Trust’s share price is quite stable, which means 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 Ascendas Hospitality Trust?
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. Though in the case of Ascendas Hospitality Trust, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Ascendas Hospitality Trust seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in 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 Ascendas Hospitality Trust 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. In addition to this, 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 Ascendas Hospitality Trust should the price fluctuate below its true value.