Chaoda Modern Agriculture (Holdings) Limited (HKG:682) shareholders that were waiting for something to happen have been dealt a blow with a 52% share price drop in the last month. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 29% share price drop.
Even after such a large drop in price, you could still be forgiven for feeling indifferent about Chaoda Modern Agriculture (Holdings)'s P/S ratio of 0.6x, since the median price-to-sales (or "P/S") ratio for the Food industry in Hong Kong is about the same. Although, it's not wise to simply ignore the P/S without explanation as investors may be disregarding a distinct opportunity or a costly mistake.
SEHK:682 Price to Sales Ratio vs Industry July 19th 2024
How Has Chaoda Modern Agriculture (Holdings) Performed Recently?
For instance, Chaoda Modern Agriculture (Holdings)'s receding revenue in recent times would have to be some food for thought. It might be that many expect the company to put the disappointing revenue performance behind them over the coming period, which has kept the P/S from falling. 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 Chaoda Modern Agriculture (Holdings)'s earnings, revenue and cash flow.
How Is Chaoda Modern Agriculture (Holdings)'s Revenue Growth Trending?
There's an inherent assumption that a company should be matching the industry for P/S ratios like Chaoda Modern Agriculture (Holdings)'s to be considered reasonable.
Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 5.1%. That put a dampener on the good run it was having over the longer-term as its three-year revenue growth is still a noteworthy 16% in total. Although it's been a bumpy ride, it's still fair to say the revenue growth recently has been mostly respectable for the company.
This is in contrast to the rest of the industry, which is expected to grow by 8.2% over the next year, materially higher than the company's recent medium-term annualised growth rates.
In light of this, it's curious that Chaoda Modern Agriculture (Holdings)'s P/S sits in line with the majority of other companies. It seems most investors are ignoring the fairly limited recent growth rates and are willing to pay up for exposure to the stock. They may be setting themselves up for future disappointment if the P/S falls to levels more in line with recent growth rates.
The Final Word
With its share price dropping off a cliff, the P/S for Chaoda Modern Agriculture (Holdings) looks to be in line with the rest of the Food industry. 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 Chaoda Modern Agriculture (Holdings) revealed its poor three-year revenue trends aren't resulting in a lower P/S as per our expectations, given they look worse than current industry outlook. When we see weak revenue with slower than industry growth, we suspect the share price is at risk of declining, bringing the P/S back in line with expectations. Unless the recent medium-term conditions improve, it's hard to accept the current share price as fair value.
It is also worth noting that we have found 2 warning signs for Chaoda Modern Agriculture (Holdings) (1 is a bit concerning!) that you need to take into consideration.
Of course, profitable companies with a history of great earnings growth are generally safer bets. So you may wish to see this free collection of other companies that have reasonable P/E ratios and have grown earnings strongly.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
在過去的一個月裏,Chaoda Modern Agriculture (Holdings) Limited (HKG:682)的股價下跌了52%,等待着發生一些事情的股東遭受了打擊。相反,已經持有股票的股東們經歷了一個29%的股價下跌,不但沒有得到獎勵,反而受到了懲罰。
即使價格大跌,你仍然可能會對Chaoda Modern Agriculture (Holdings)的市銷率0.6倍感到冷漠,因爲香港食品行業的中位數市銷率大約相同。然而,不明確解釋市銷率並不明智,因爲投資者可能會忽略某種獨特的機會或代價高昂的錯誤。
SEHK:682市銷率與行業板塊2024年7月19日的對比
Chaoda Modern Agriculture (Holdings)的近況如何?
比如,Chaoda Modern Agriculture (Holdings) 最近的營業收入下降必須要引起人們的關注。可能許多人期待該公司在未來一段時期內將令人失望的營收表現拋之腦後,這也使得市銷率沒有下降。如果沒有,那麼現有股東將對股價的可行性感到有些緊張。
我們沒有分析師的預測,但你可以查看關於Chaoda Modern Agriculture (Holdings)收益、營業收入和現金流的免費報告,來了解公司最近的趨勢如何爲未來做好準備。
Chaoda Modern Agriculture (Holdings)的營業收入增長情況如何?
認爲一家公司應該與行業板塊的市銷率相匹配,才能被認爲是合理的,這是一個固有假設,如Chaoda Modern Agriculture (Holdings)的市銷率,常讓人感到困惑。
鑑於此,Chaoda Modern Agriculture (Holdings)的市銷率與其他大部分公司保持一致,這顯得很好奇。似乎大多數投資者忽略了相當有限的最近增長率,並願意爲接觸到該股付出代價。如果市銷率跌至與最近增長率相符合的水平,他們可能正在爲未來的失望做出準備。
最終結論
隨着其股價暴跌,Chaoda Modern Agriculture (Holdings)的市銷率與食品行業的其餘部分保持一致。雖然市銷率被認爲是某些行業內價值不佳的度量標準,但它是一種強大的業務情緒指標。
我們對Chaoda Modern Agriculture (Holdings)的審查顯示,其不良的三年營收趨勢並沒有導致我們預期的市銷率降低,因爲它們看起來比當前行業前景更糟糕。當我們看到營收疲軟且增長速度低於行業平均水平時,我們認爲股價有下跌的風險,將市銷率帶回符合預期的水平。除非最近的中期情況改善,否則很難接受當前股價的公平價值。