Shanghai General Healthy Information and Technology Co., Ltd. (SHSE:605186) shares have had a really impressive month, gaining 30% after a shaky period beforehand. Looking back a bit further, it’s encouraging to see the stock is up 52% in the last year.
After such a large jump in price, Shanghai General Healthy Information and Technology may be sending very bearish signals at the moment with a price-to-earnings (or “P/E”) ratio of 57.5x, since almost half of all companies in China have P/E ratios under 29x and even P/E’s lower than 18x 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.
Shanghai General Healthy Information and Technology has been struggling lately as its earnings have declined faster than most other companies. One possibility is that the P/E is high because investors think the company will turn things around completely…
