Suntec Real Estate Investment Trust (SGX:T82U), a equity real estate investment trusts (reits) company based in Singapore, saw a decent share price growth in the teens level on the SGX over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Suntec Real Estate Investment Trust’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for Suntec Real Estate Investment Trust
What is Suntec Real Estate Investment Trust worth?
The stock is currently trading at SGD2.19 on the share market, which means it is overvalued by 95% compared to my intrinsic value of SGD1.12. This means that the buying opportunity has probably disappeared for now. Another thing to keep in mind is that Suntec Real Estate Investment Trust’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
Can we expect growth from Suntec Real Estate Investment Trust?
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. Though in the case of Suntec Real Estate Investment Trust, it is expected to deliver a negative earnings growth of -8.04%, 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? If you believe Suntec Real Estate Investment Trust 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. Given the uncertainty from negative growth in the future, this could be the right time to reduce your total portfolio risk. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on Suntec Real Estate Investment Trust for some time, now may not be the best time to enter into the stock. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Should the price fall in the future, will you be well-informed enough to buy?