Beijing Capital International Airport Company Limited (HKG:694), which is in the infrastructure business, and is based in China, saw significant share price volatility over the past couple of months on the SEHK, rising to the highs of HK$9.51 and falling to the lows of HK$8.07. 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 Beijing Capital International Airport’s current trading price of HK$8.25 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 Beijing Capital International Airport’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What’s the opportunity in Beijing Capital International Airport?
Good news, investors! Beijing Capital International Airport is still a bargain right now. My valuation model shows that the intrinsic value for the stock is HK$15.36, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Beijing Capital International Airport’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 Beijing Capital International Airport?
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. However, with a negative profit growth of -15% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Beijing Capital International Airport. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although 694 is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to 694, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on 694 for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Beijing Capital International Airport. You can find everything you need to know about Beijing Capital International Airport in the latest infographic research report. If you are no longer interested in Beijing Capital International Airport, 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 email@example.com.