Perennial Real Estate Holdings Limited (SGX:40S), a real estate management and development company based in Singapore, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of SGD0.84 to SGD0.9. However, is this the true valuation level of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Perennial Real Estate Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for Perennial Real Estate Holdings
What is Perennial Real Estate Holdings worth?
Great news for investors – Perennial Real Estate Holdings is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is SGD6.76, but it is currently trading at SGD0.86 on the share market, meaning that there is still an opportunity to buy now. Perennial Real Estate Holdings’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.
Can we expect growth from Perennial Real Estate Holdings?
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. Though in the case of Perennial Real Estate Holdings, 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? Although Perennial Real Estate Holdings is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to Perennial Real Estate Holdings, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on Perennial Real Estate Holdings for some time, but hesitant on making the leap, I recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.