Sign up
Log in
Investors Appear Satisfied With SY Holdings Group Limited's (HKG:6069) Prospects As Shares Rocket 32%
Share
Listen to the news

Despite an already strong run, SY Holdings Group Limited (HKG:6069) shares have been powering on, with a gain of 32% in the last thirty days. The last 30 days bring the annual gain to a very sharp 43%.

Following the firm bounce in price, SY Holdings Group may be sending very bearish signals at the moment with a price-to-earnings (or "P/E") ratio of 26.7x, since almost half of all companies in Hong Kong have P/E ratios under 9x and even P/E's lower than 6x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the highly elevated P/E.

With earnings growth that's superior to most other companies of late, SY Holdings Group has been doing relatively well. It seems that many are expecting the strong earnings performance to persist, which has raised the P/E. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

View our latest analysis for SY Holdings Group

pe-multiple-vs-industry
SEHK:6069 Price to Earnings Ratio vs Industry November 8th 2024
Want the full picture on analyst estimates for the company? Then our free report on SY Holdings Group will help you uncover what's on the horizon.

Is There Enough Growth For SY Holdings Group?

In order to justify its P/E ratio, SY Holdings Group would need to produce outstanding growth well in excess of the market.

Taking a look back first, we see that the company managed to grow earnings per share by a handy 12% last year. Ultimately though, it couldn't turn around the poor performance of the prior period, with EPS shrinking 25% in total over the last three years. So unfortunately, we have to acknowledge that the company has not done a great job of growing earnings over that time.

Turning to the outlook, the next year should generate growth of 42% as estimated by the dual analysts watching the company. With the market only predicted to deliver 23%, the company is positioned for a stronger earnings result.

In light of this, it's understandable that SY Holdings Group's P/E sits above the majority of other companies. It seems most investors are expecting this strong future growth and are willing to pay more for the stock.

The Final Word

The strong share price surge has got SY Holdings Group's P/E rushing to great heights as well. Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

As we suspected, our examination of SY Holdings Group's analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E. At this stage investors feel the potential for a deterioration in earnings isn't great enough to justify a lower P/E ratio. It's hard to see the share price falling strongly in the near future under these circumstances.

Don't forget that there may be other risks. For instance, we've identified 2 warning signs for SY Holdings Group (1 shouldn't be ignored) you should be aware of.

You might be able to find a better investment than SY Holdings Group. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

Disclaimer:This article represents the opinion of the author only. It does not represent the opinion of Webull, nor should it be viewed as an indication that Webull either agrees with or confirms the truthfulness or accuracy of the information. It should not be considered as investment advice from Webull or anyone else, nor should it be used as the basis of any investment decision.
What's Trending
No content on the Webull website shall be considered a recommendation or solicitation for the purchase or sale of securities, options or other investment products. All information and data on the website is for reference only and no historical data shall be considered as the basis for judging future trends.