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Today we’re going to take a look at the well-established China Life Insurance Company Limited (HKG:2628). The company’s stock led the SEHK gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s take a look at China Life Insurance’s outlook and value based on the most recent financial data to see if the opportunity still exists.
View our latest analysis for China Life Insurance
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What is China Life Insurance worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 8.38% above my intrinsic value, which means if you buy China Life Insurance today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth HK$17.61, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because China Life Insurance’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What does the future of China Life Insurance look like?
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. China Life Insurance’s earnings over the next few years are expected to increase by 88%, 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? 2628’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 track record of its management team. 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?