While Kingfa Sci. & Tech. Co., Ltd. (SHSE:600143) might not have the largest market cap around , it saw a double-digit share price rise of over 10% in the past couple of months on the SHSE. While good news for shareholders, the company has traded much higher in the past year. As a CN¥19b market cap stock, it seems odd Kingfa Sci. & Tech is not more well-covered by analysts. However, this is not necessarily a bad thing given that there are less eyes on the stock to push it closer to fair value. Is there still an opportunity to buy? Let's examine Kingfa Sci. & Tech's valuation and outlook in more detail to determine if there's still a bargain opportunity.

What's The Opportunity In Kingfa Sci. & Tech?

Great news for investors – Kingfa Sci. & Tech is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we've used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock's cash flows. we find that Kingfa Sci. & Tech's ratio of 15.18x is below its peer average of 24.95x, which indicates the stock is trading at a lower price compared to the Chemicals industry. What's more interesting is that, Kingfa Sci. & Tech's share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from Kingfa Sci. & Tech?

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. Kingfa Sci. & Tech's earnings over the next few years are expected to increase by 93%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since 600143 is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. With an optimistic profit 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 price multiple.

Are you a potential investor? If you've been keeping an eye on 600143 for a while, now might be the time to make a leap. Its prosperous future profit outlook isn't fully reflected in the current share price yet, which means it's not too late to buy 600143. 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 assessment.

So while earnings quality is important, it's equally important to consider the risks facing Kingfa Sci. & Tech at this point in time. To that end, you should learn about the 2 warning signs we've spotted with Kingfa Sci. & Tech (including 1 which is concerning).

If you are no longer interested in Kingfa Sci. & Tech, 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.