Huali Industrial Group Company Limited (SZSE:300979), is not the largest company out there, but it received a lot of attention from a substantial price movement on the SZSE over the last few months, increasing to CN¥72.37 at one point, and dropping to the lows of CN¥57.96. 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 Huali Industrial Group's current trading price of CN¥58.29 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 Huali Industrial Group's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

What Is Huali Industrial Group Worth?

The stock seems fairly valued at the moment according to our valuation model. It's trading around 11% below our intrinsic value, which means if you buy Huali Industrial Group today, you'd be paying a fair price for it. And if you believe that the stock is really worth CN¥65.58, then there isn't much room for the share price grow beyond what it's currently trading. Although, there may be an opportunity to buy in the future. This is because Huali Industrial Group's beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Huali Industrial Group look like?

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 grow by 30% over the next couple of years, the future seems bright for Huali Industrial Group. 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? 300979's optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you've been keeping an eye on 300979, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it's worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. In terms of investment risks, we've identified 1 warning sign with Huali Industrial Group, and understanding it should be part of your investment process.

If you are no longer interested in Huali Industrial Group, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com