CIG ShangHai Co., Ltd. (SHSE:603083) shareholders would be excited to see that the share price has had a great month, posting a 27% gain and recovering from prior weakness. Looking back a bit further, it’s encouraging to see the stock is up 96% in the last year.
Following the firm bounce in price, CIG ShangHai may be sending very bearish signals at the moment with a price-to-earnings (or “P/E”) ratio of 56.5x, since almost half of all companies in China have P/E ratios under 28x and even P/E’s lower than 17x are not unusual. However, the P/E might be quite high for a reason and it requires further investigation to determine if it’s justified.
Recent times have been quite advantageous for CIG ShangHai as its earnings have been rising very briskly. It seems that many are expecting the strong earnings performance to beat most other companies over the coming period, which has increased investors’ willingness to pay up…
