At HK$2.10, is China Datang Corporation Renewable Power Co., Limited (HKG: 1798) worth a close look?
China Datang Corporation Renewable Power Co., Limited (HKG:1798) may not be a large-cap stock, but it has seen decent share price growth at the teen level on the SEHK over the past of the last few months. With plenty of analysts covering the stock, we can expect any price-sensitive announcements to have already factored into the stock price. But what if there is still an opportunity to buy? Let’s take a look at China Datang Corporation Renewable Power’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Check out our latest analysis for China Datang Corporation Renewable Power
What is China Datang Corporation’s Renewable Energy Opportunity?
According to my valuation model, the stock is currently overvalued by around 33%, trading at HK$2.10 versus my intrinsic value of HK$1.58. This means that the buying opportunity is probably gone for now. Another thing to keep in mind is that China Datang Corporation Renewable Power’s stock price is quite stable relative to the market, as indicated by its low beta. This means that if you believe the current stock price should approach its intrinsic value over time, a low beta could suggest that it is unlikely to reach that level anytime soon, and once it does will be there, it can be difficult to fall back into an attractive buying range again.
Can we expect growth from China Datang Corporation Renewable Power?
Investors looking for portfolio growth may want to consider a company’s prospects before buying its stock. Although value investors argue that it is intrinsic value relative to price that matters most, a more compelling investment thesis would be high growth potential at a cheap price. The profits of China Datang Corporation Renewable Power over the next few years are expected to double, indicating a very optimistic future. This should lead to higher cash flow, fueling higher share value.
What this means for you
Are you a shareholder? The optimistic future growth of 1798 appears to have been factored into the current share price, with the stock trading above its fair value. At this current price, shareholders may ask a different question: should I sell? If you think 1798 should be trading below its current price, selling at a high price and buying it back when its price drops towards its true value can be profitable. But before making this decision, see if its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on 1798 for a while, now might not be the best time to get into the stock. The price has exceeded its true value, which means there is no advantage to bad pricing. However, the positive outlook is encouraging for 1798, which means it is worth digging into other factors in order to take advantage of the next price drop.
If you want to learn more about China Datang Corporation Renewable Power as a business, it is important to be aware of the risks it faces. Our analysis shows 2 warning signs for China Datang Corporation Renewable Power (1 cannot be ignored!) and we strongly recommend that you consult them before investing.
If you are no longer interested in China Datang Corporation Renewable Power, you can use our free platform to view our list of over 50 other stocks with high growth potential.
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
Calculation of discounted cash flows for each share
Simply Wall St performs a detailed calculation of discounted cash flow every 6 hours for every stock in the market, so if you want to find the intrinsic value of any company, just search here. It’s free.