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Hang Lung Properties Limited (HKG:101), which is in the real estate business, and is based in Hong Kong, received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$19.92 at one point, and dropping to the lows of HK$17.08. 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 Hang Lung Properties's current trading price of HK$17.86 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 Hang Lung Properties’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
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Check out our latest analysis for Hang Lung Properties
Is Hang Lung Properties still cheap?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 9.94x is currently trading slightly above its industry peers’ ratio of 6.22x, which means if you buy Hang Lung Properties today, you’d be paying a relatively reasonable price for it. And if you believe that Hang Lung Properties should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Hang Lung Properties’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.
Can we expect growth from Hang Lung Properties?
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. 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. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Hang Lung Properties, at least in the near future.