China International Holdings Limited (SGX:BEH) shareholders would be excited to see that the share price has had a great month, posting a 81% gain and recovering from prior weakness. Longer-term shareholders would be thankful for the recovery in the share price since it's now virtually flat for the year after the recent bounce.
Although its price has surged higher, China International Holdings' price-to-sales (or "P/S") ratio of 0.4x might still make it look like a buy right now compared to the Water Utilities industry in Singapore, where around half of the companies have P/S ratios above 1.7x and even P/S above 4x are quite common. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.
SGX:BEH Price to Sales Ratio vs Industry August 12th 2024
How China International Holdings Has Been Performing
For example, consider that China International Holdings' financial performance has been poor lately as its revenue has been in decline. Perhaps the market believes the recent revenue performance isn't good enough to keep up the industry, causing the P/S ratio to suffer. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.
Want the full picture on earnings, revenue and cash flow for the company? Then our free report on China International Holdings will help you shine a light on its historical performance.
Is There Any Revenue Growth Forecasted For China International Holdings?
The only time you'd be truly comfortable seeing a P/S as low as China International Holdings' is when the company's growth is on track to lag the industry.
Retrospectively, the last year delivered a frustrating 5.5% 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 38% in total over the last three years. Accordingly, shareholders would have felt downbeat about the medium-term rates of revenue growth.
In contrast to the company, the rest of the industry is expected to grow by 23% over the next year, which really puts the company's recent medium-term revenue decline into perspective.
With this information, we are not surprised that China International Holdings is trading at a P/S lower than the industry. However, we think shrinking revenues are unlikely to lead to a stable P/S over the longer term, which could set up shareholders for future disappointment. There's potential for the P/S to fall to even lower levels if the company doesn't improve its top-line growth.
The Key Takeaway
China International Holdings' stock price has surged recently, but its but its P/S still remains modest. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
Our examination of China International Holdings confirms that the company's shrinking revenue over the past medium-term is a key factor in its low price-to-sales ratio, given the industry is projected to grow. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Given the current circumstances, it seems unlikely that the share price will experience any significant movement in either direction in the near future if recent medium-term revenue trends persist.
Before you take the next step, you should know about the 4 warning signs for China International Holdings (3 don't sit too well with us!) that we have uncovered.
If you're unsure about the strength of China International Holdings' business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. 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.
China International Holdings Limited(SGX:BEH)の株主は、株価が大幅に上昇し、以前の弱点から回復し、大いに興奮していると感じるでしょう。長期的な株主は、最近のバウンス後、現在ほぼ年初来安値である株価の回復に感謝するでしょう。
たとえば、China International Holdingsの財務パフォーマンスは最近低迷しており、売上高が減少しているため、市場は最近の売上高パフォーマンスが業界に追いつくのに十分ではないと考えて、P / S比率が低下していると考えているかもしれません。もし企業が好きなら、このような場合であっても、株が下落した時に入手できる可能性があるため、株を購入したいと思うかもしれません。
会社の収益、売上高、キャッシュフローに関する完全な情報を知りたい場合は、当社のChina International Holdingsに関する無料レポートを利用して、その過去のパフォーマンスを紹介しています。
China International Holdingsには、売上高の成長予測はありますか?
China International HoldingsのP / S比率が低いのを本当に快く思うのは、企業の成長が業界に遅れをとる方向にある場合だけです。
この情報から、China International Holdingsが業界よりも低いP / Sで取引されていることには驚きません。ただし、収益が減少すると、将来的に株主を失望させる可能性があるため、P / Sの安定につながらない可能性があります。企業が売上高の成長を改善しない限り、P / Sがさらに低下する可能性があります。
重要なポイント
China International Holdingsの株価は最近急騰しましたが、P / Sはまだ控えめなままです。P / S比率は、特定の産業内での価値の劣った測定方法であると主張されていますが、それは強力なビジネスセンチメントの指標になる場合があります。
China International Holdingsに関する当社の調査は、中期的に売上高が低迷していることが、業界が成長することを考慮すると、低い価格対売上高比率の主要な要因であることを確認しています。現時点では、投資家は、売上高の改善の可能性が高いとは考えていないため、より高いP / S比率を正当化するには十分ではないと感じています。現在の状況では、最近の中期的な売上高のトレンドが続く限り、株価が近い将来に大きく動く可能性は低いと思われます。
次のステップを踏む前に、当社が発見したChina International Holdingsの4つの警告サイン(うち3つは私たちにとってあまりよくありません)を知っておくべきです。
China International Holdingsのビジネスの強さについて自信がない場合は、見逃した可能性のある他の企業の堅固なビジネス基盤を持つ株式のインタラクティブリストを探索してみてはどうでしょうか。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。
オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。