Shareholders are nervous about the EPS decline. The recent sell-off could be an opportunity, but Shanghai Fudan Microelectronics Group has 2 warning signs investors should be aware of.

Despite a superior earnings outlook, Shanghai Fudan Microelectronics Group's P/E ratio doesn't reflect this positivity as expected. Unobserved threats to earnings may be a factor, with some shareholders anticipating earnings instability.

The growth in Shanghai Fudan Microelectronics Group's ROCE combined with an increase in its capital employed is a positive trend, which has begun to be recognized by investors.

Investors' high expectations of Shanghai Fudan Microelectronics are curious given its mere 24% predicted EPS increase for the coming year. This level of growth may depress the share price, suggesting further gains may be difficult.

Long-term investors would not be as concerned since they made annual gains of 11% over five years. If the company's fundamentals continue to indicate long-term sustainable growth, the current sell-off could be considered a good buying opportunity.

China's economy is rebounding while overseas risks remain. Everbright Securities gives its Hong Kong stock strategy and key recommendation portfolios for July 2022.
Key takeaways:
1. HK stock indexes rose in fluctuation in June.
The Hong Kong stock market's upward swing in June mainly resulted from favorable policies and improved China's economic fundamentals. With the overall release of China's epidemic control, the 33 economic sta...