Hangzhou Huaxing Chuangye Communication Technology Co., Ltd. (SZSE:300025) has seen a significant increase in its share price over the last month, with a gain of 40%. While the full year gain of 23% is also promising, the company’s price-to-sales ratio of 9.5x is much higher compared to other companies in the Telecom industry in China.
Despite the recent increase in share price, the company’s financial performance has been poor, with declining revenue. This has raised concerns about the sustainability of the elevated P/S ratio. Without analyst estimates, it is hard to determine if the company will outperform the industry in the near future.
Considering the company’s revenue decline over the past three years and the industry’s predicted growth of 5.0% in the next 12 months, investors may be overly optimistic about Hangzhou Huaxing Chuangye Communication Technology’s future prospects. The high P/S ratio may not be justified given the company’s revenue trends.
Investors should be cautious and analyze the company’s financial performance thoroughly before making investment decisions. With warning signs in the company’s investment analysis, it is important to conduct proper due diligence and consider all factors before investing in Hangzhou Huaxing Chuangye Communication Technology.
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