Yahoo Finance Is Now An Opportune Moment To Examine Leong Hup International Berhad (KLSE:LHI)?
Leong Hup International Berhad (KLSE:LHI), might not be a large cap stock, but it saw significant share price movement during recent months on the KLSE, rising to highs of RM0.71 and falling to the lows of RM0.53. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Leong Hup International Berhad's current trading price of RM0.57 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Leong Hup International Berhad’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Leong Hup International Berhad
What Is Leong Hup International Berhad Worth?
The stock is currently trading at RM0.57 on the share market, which means it is overvalued by 21% compared to our intrinsic value of MYR0.47. This means that the buying opportunity has probably disappeared for now. Another thing to keep in mind is that Leong Hup International Berhad’s share price is quite stable relative to 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.
What does the future of Leong Hup International Berhad look like?
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. However, with a negative profit growth of -14% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Leong Hup International Berhad. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? If you believe LHI 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 de-risk your portfolio. 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 LHI 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?
So while earnings quality is important, it's equally important to consider the risks facing Leong Hup International Berhad at this point in time. Be aware that Leong Hup International Berhad is showing 3 warning signs in our investment analysis and 1 of those can't be ignored...
If you are no longer interested in Leong Hup International Berhad, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
