Those holding Shanghai GenTech Co., Ltd. (SHSE:688596) shares would be relieved that the share price has rebounded 26% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. Taking a wider view, although not as strong as the last month, the full year gain of 17% is also fairly reasonable.
In spite of the firm bounce in price, given about half the companies in China have price-to-earnings ratios (or “P/E’s”) above 31x, you may still consider Shanghai GenTech as an attractive investment with its 27x P/E ratio. However, the P/E might be low for a reason and it requires further investigation to determine if it’s justified.
With its earnings growth in positive territory compared to the declining earnings of most other companies, Shanghai GenTech has been doing quite well of late. One possibility is that the P/E is low because investors think the company’s…
