Those holding Shanghai Guijiu Co.,Ltd (SHSE:600696) shares would be relieved that the share price has rebounded 27% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. But the last month did very little to improve the 68% share price decline over the last year.
After such a large jump in price, Shanghai GuijiuLtd’s price-to-earnings (or “P/E”) ratio of 77.6x 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 27x and even P/E’s below 16x 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.
For instance, Shanghai GuijiuLtd’s receding earnings in recent times would have to be some food for thought. It might be that many expect the company to still outplay most other companies over the coming period,…
