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China Resources Land (SEHK:1109) has drawn investor attention after recent share price moves, with the stock showing mixed short term returns but a stronger year to date and one year total return profile.
See our latest analysis for China Resources Land.
At a share price of HK$30.96, China Resources Land has seen a 5.81% 1 month share price return and an 11.69% year to date share price return. Its 1 year total shareholder return of 29.57% suggests momentum has been building over a longer stretch.
If this has you thinking about where else capital could work hard, it might be a good time to scan our list of 102 top founder-led companies for fresh ideas beyond large cap property names.
With China Resources Land trading at HK$30.96 and data pointing to a potential intrinsic and analyst target discount, the key question is whether the stock still offers value or if the market is already pricing in future growth.
On the numbers available, China Resources Land looks inexpensive on earnings, with a P/E of 7.2x at a share price of HK$30.96 and several valuation checks pointing to a discount.
The P/E ratio compares what you pay today for each unit of earnings, so a lower P/E can indicate the market is applying a cheaper earnings tag than it does to similar companies.
For China Resources Land, several indicators line up on the side of value. It is assessed as trading at 42.5% below an estimated fair value, and the SWS DCF model suggests the shares at HK$30.96 sit below an estimated future cash flow value of HK$53.81. In addition, its P/E of 7.2x is described as good value versus both the Hong Kong real estate industry average of 14.8x and a peer average of 20x. It also sits well below an estimated fair P/E of 15.4x that the market could move towards if sentiment and fundamentals stay aligned with that benchmark.
Compared to the wider Hong Kong real estate space, this combination of a low current P/E, a higher fair P/E indication and a DCF estimate above the current price suggests the market is currently assigning a relatively cautious earnings multiple to China Resources Land versus what these models imply.
Explore the SWS fair ratio for China Resources Land
Result: Price to earnings of 7.2x (UNDERVALUED)
However, you also have to weigh risks such as the annual revenue contraction of 2.09% and any shift in investor appetite toward Hong Kong real estate names.
