Let's talk about the popular Henderson Land Development Company Limited (HKG:12). The company's shares received a lot of attention from a substantial price movement on the SEHK over the last few months, increasing to HK$27.80 at one point, and dropping to the lows of HK$21.35. 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 Henderson Land Development's current trading price of HK$21.35 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 Henderson Land Development'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 Henderson Land Development

What's The Opportunity In Henderson Land Development?

The stock seems fairly valued at the moment according to my valuation model. It's trading around 0.48% above my intrinsic value, which means if you buy Henderson Land Development today, you'd be paying a relatively reasonable price for it. And if you believe that the stock is really worth HK$21.25, there's only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Henderson Land Development'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 kind of growth will Henderson Land Development generate?

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. With profit expected to grow by 58% over the next couple of years, the future seems bright for Henderson Land Development. 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? It seems like the market has already priced in 12's positive outlook, 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 12, 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.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. In terms of investment risks, we've identified 2 warning signs with Henderson Land Development, and understanding these should be part of your investment process.

If you are no longer interested in Henderson Land Development, 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.