Yashili International Holdings Ltd (SEHK:1230), a food company based in China, received a lot of attention from a substantial price movement on the SEHK in the over the last few months, increasing to HK$1.8 at one point, and dropping to the lows of HK$1.49. 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 Yashili International Holdings’s current trading price of HK$1.54 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 Yashili International Holdings’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 Yashili International Holdings
What is Yashili International Holdings worth?
Yashili International Holdings appears to be overvalued by 76% at the moment, based on my discounted cash flow valuation. The stock is currently priced at HK$1.54 on the market compared to my intrinsic value of HK$0.88. This means that the opportunity to buy Yashili International Holdings at a good price has disappeared! In addition to this, it seems like Yashili International Holdings’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Yashili International Holdings 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 91.05% over the next year, the near-term future seems bright for Yashili International Holdings. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in Yashili International Holdings’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe Yashili International Holdings should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.