Shanghai Haoyuan Chemexpress Co., Ltd. (SHSE:688131) shares have continued their recent momentum with a 36% gain in the last month alone. But the gains over the last month weren’t enough to make shareholders whole, as the share price is still down 2.4% in the last twelve months.
Since its price has surged higher, Shanghai Haoyuan Chemexpress’ price-to-earnings (or “P/E”) ratio of 62.8x might make it look like a strong sell right now compared to the market in China, where around half of the companies have P/E ratios below 34x and even P/E’s below 20x are quite common. Although, it’s not wise to just take the P/E at face value as there may be an explanation why it’s so lofty.
The recently shrinking earnings for Shanghai Haoyuan Chemexpress have been in line with the market. One possibility is that the P/E is high because investors think the company can turn things around and break free from the broader downward trend in…
