Today we're going to take a look at the well-established China Tourism Group Duty Free Corporation Limited (SHSE:601888). The company's stock received a lot of attention from a substantial price movement on the SHSE over the last few months, increasing to CN¥126 at one point, and dropping to the lows of CN¥90.07. 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 China Tourism Group Duty Free's current trading price of CN¥90.20 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at China Tourism Group Duty Free's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for China Tourism Group Duty Free
What's The Opportunity In China Tourism Group Duty Free?
Great news for investors – China Tourism Group Duty Free is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is CN¥113.28, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that China Tourism Group Duty Free'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.
What kind of growth will China Tourism Group Duty Free generate?
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. With profit expected to more than double over the next couple of years, the future seems bright for China Tourism Group Duty Free. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? Since 601888 is currently undervalued, it may be a great time to accumulate more of 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 capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you've been keeping an eye on 601888 for a while, now might be the time to make a leap. Its prosperous future outlook isn't fully reflected in the current share price yet, which means it's not too late to buy 601888. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.
So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 3 warning signs for China Tourism Group Duty Free and we think they deserve your attention.
If you are no longer interested in China Tourism Group Duty Free, 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.