Assessing Guangdong Investment (SEHK:270) Valuation After Profit Guidance And Business Reshaping

Simply Wall St.01-29

AdvertisementGuidance-driven profit jump and business reshaping Guangdong Investment (SEHK:270) has put out preliminary unaudited guidance for 2025, flagging about a 43% rise in profit attributable to...

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The uplift is tied to two main factors: the spin out of Guangdong Land Holdings Limited through a special dividend in specie that removed its losses from group results, and higher profit from continuing operations helped by lower net finance costs and administrative expenses. See our latest analysis for Guangdong Investment. Guangdong Investment’s guidance has landed after a period of improving momentum, with a 1 month share price return of 10.86% and a 1 year total shareholder return of 33.02% from a HK$7.45 share price starting point. If this shift in sentiment has you looking beyond a single name, it could be a good time to broaden your watchlist with fast growing stocks with high insider ownership. With the shares up 33.02% over the past year and guidance pointing to a profit uplift after reshaping the business, you now have to ask yourself: is Guangdong Investment still undervalued, or is the market already pricing in future growth? Preferred P/E of 10.7x: Is it justified? Guangdong Investment closed at HK$7.45, and on a P/E of 10.7x it screens mixed, looking cheaper than the wider Asian water utilities group but richer than its direct peer set and our fair ratio. P/E compares the current share price to earnings per share and is often used for companies like Guangdong Investment that already generate profits, because it ties valuation directly to the earnings the business is producing today. Here, the company is described as good value versus the Asian Water Utilities industry average P/E of 14.9x, which suggests the market is not paying as much for each unit of earnings as it does for the broader regional group. However, that same 10.7x multiple is higher than the peer average of 9.3x, and above the estimated fair P/E of 8.8x that our regression based fair ratio implies the market could move toward if sentiment cools. Against this backdrop, Guangdong Investment sits at a crossroads. It appears cheaper than the wider industry but richer than closer peers and its own fair ratio benchmark, which gives you a clearer sense of how much optimism is already in the price. Explore the SWS fair ratio for Guangdong Investment Result: Price-to-Earnings of 10.7x (ABOUT RIGHT) However, you still have to weigh risks such as the recent 1% revenue contraction and the 5-year total return of 21%, which could limit sentiment. Find out about the key risks to this Guangdong Investment narrative. Another view, using our DCF model While the P/E of 10.7x suggests Guangdong Investment sits between peers and the wider industry, our DCF model points in a very different direction, with an estimated future cash flow value of HK$34.24 per share versus the current HK$7.45 price. If the market ever leans closer to that cash flow view, the gap could represent upside potential. It also highlights that valuation models can disagree sharply, so consider which one you trust more for your own decision making. Look into how the SWS DCF model arrives at its fair value. 270 Discounted Cash Flow as at Jan 2026Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Guangdong Investment for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 880 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.  Build Your Own Guangdong Investment Narrative If you see the numbers differently or simply want to stress test these assumptions against your own view, you can build a personalised story in just a few minutes with Do it your way. A great starting point for your Guangdong Investment research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision. Looking for more investment ideas? If Guangdong Investment is on your radar, do not stop there. The Screener can quickly surface other focused ideas that might fit what you are trying to achieve.  Target potential value by checking out these 880 undervalued stocks based on cash flows, where cash flow based pricing helps you spot candidates that may be trading below what their numbers suggest. Expand your growth watchlist with these 24 AI penny stocks, tapping into companies linked to artificial intelligence themes across different parts of the market. Strengthen your income shortlist using these 14 dividend stocks with yields > 3%, highlighting companies that currently offer yields above 3% alongside other financial metrics.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    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\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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