Sino ICT Holdings Limited (HKG:365) shareholders that were waiting for something to happen have been dealt a blow with a 28% share price drop in the last month. The recent drop completes a disastrous twelve months for shareholders, who are sitting on a 55% loss during that time.
In spite of the heavy fall in price, it's still not a stretch to say that Sino ICT Holdings' price-to-sales (or "P/S") ratio of 0.9x right now seems quite "middle-of-the-road" compared to the Machinery industry in Hong Kong, where the median P/S ratio is around 0.7x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.
What Does Sino ICT Holdings' Recent Performance Look Like?
As an illustration, revenue has deteriorated at Sino ICT Holdings over the last year, which is not ideal at all. One possibility is that the P/S is moderate because investors think the company might still do enough to be in line with the broader industry in the near future. If not, then existing shareholders may be a little nervous about the viability of the share price.
We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Sino ICT Holdings' earnings, revenue and cash flow.
Is There Some Revenue Growth Forecasted For Sino ICT Holdings?
Sino ICT Holdings' P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.
Retrospectively, the last year delivered a frustrating 8.4% decrease to the company's top line. This means it has also seen a slide in revenue over the longer-term as revenue is down 22% in total over the last three years. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.
Comparing that to the industry, which is predicted to deliver 12% growth in the next 12 months, the company's downward momentum based on recent medium-term revenue results is a sobering picture.
With this information, we find it concerning that Sino ICT Holdings is trading at a fairly similar P/S compared to the industry. Apparently many investors in the company are way less bearish than recent times would indicate and aren't willing to let go of their stock right now. Only the boldest would assume these prices are sustainable as a continuation of recent revenue trends is likely to weigh on the share price eventually.
The Final Word
Sino ICT Holdings' plummeting stock price has brought its P/S back to a similar region as the rest of the industry. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.
The fact that Sino ICT Holdings currently trades at a P/S on par with the rest of the industry is surprising to us since its recent revenues have been in decline over the medium-term, all while the industry is set to grow. Even though it matches the industry, we're uncomfortable with the current P/S ratio, as this dismal revenue performance is unlikely to support a more positive sentiment for long. Unless the the circumstances surrounding the recent medium-term improve, it wouldn't be wrong to expect a a difficult period ahead for the company's shareholders.
Don't forget that there may be other risks. For instance, we've identified 1 warning sign for Sino ICT Holdings that you should be aware of.
If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
Sino ICt Holdings Limited (HKG:365) 的股東們等待着某些事情發生,但在上個月股價暴跌了28%,給他們帶來了打擊。最近的下跌完成了股東們十二個月的災難,他們在那段時間裏蒙受了55%的損失。
Sino ICt Holdings 的暴跌股價將其市銷率帶回了與該行業其他公司相似的範圍內。通常,我們會警告不要在決定投資時過分考慮市銷率,儘管它可以顯示其他市場參與者對公司的看法。
Sino ICt Holdings 目前的市銷率與行業其他公司相當,這對我們來說是令人驚訝的,因爲它的最近營收在中期內一直在下降,而該行業正在增長。即使它與行業相匹配,我們仍對目前的市銷率感到不舒服,因爲這種慘淡的營收表現不可能長期支撐更積極的情緒。除非最近中期的情況得到改善,否則預計公司股東將迎來艱難的時期。