Let’s talk about the popular China Gas Holdings Limited (SEHK:384). The company’s shares received a lot of attention from a substantial price movement on the SEHK in the over the last few months, increasing to HK$25 at one point, and dropping to the lows of HK$20.95. 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 China Gas Holdings’s current trading price of HK$22.6 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at China Gas 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 China Gas Holdings
Is China Gas Holdings still cheap?
The stock is currently trading at HK$22.6 on the share market, which means it is overvalued by 86% compared to my intrinsic value of HK$12.18. This means that the opportunity to buy China Gas Holdings at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since China Gas Holdings’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will China Gas Holdings generate?
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. With profit expected to grow by 46.74% over the next couple of years, the future seems bright for China Gas 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 China Gas Holdings’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe China Gas 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.