Great Wall Motor Company Limited (HKG:2333), a auto company based in China, received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$8.1 at one point, and dropping to the lows of HK$4.48. 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 Great Wall Motor’s current trading price of HK$4.68 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 Great Wall Motor’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What is Great Wall Motor worth?
Good news, investors! Great Wall Motor is still a bargain right now. My valuation model shows that the intrinsic value for the stock is HK$7.97, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Great Wall Motor’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Great Wall Motor?
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. 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. Great Wall Motor’s earnings over the next few years are expected to increase by 62.40%, 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? Since 2333 is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on 2333 for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy 2333. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Great Wall Motor. You can find everything you need to know about Great Wall Motor in the latest infographic research report. If you are no longer interested in Great Wall Motor, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.