Those holding Shanghai Lonyer Data Co., Ltd. (SHSE:603003) shares would be relieved that the share price has rebounded 28% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. Unfortunately, the gains of the last month did little to right the losses of the last year with the stock still down 44% over that time.
Following the firm bounce in price, Shanghai Lonyer Data’s price-to-earnings (or “P/E”) ratio of 36.6x might make it look like a sell right now compared to the market in China, where around half of the companies have P/E ratios below 28x and even P/E’s below 17x are quite common. Nonetheless, we’d need to dig a little deeper to determine if there is a rational basis for the elevated P/E.
With earnings growth that’s exceedingly strong of late, Shanghai Lonyer Data has been doing very well. The P/E is probably high because investors think this strong…
