Those holding Kangxi Communication Technologies (Shanghai) Co., Ltd. (SHSE:688653) 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. While recent buyers may be laughing, long-term holders might not be as pleased since the recent gain only brings the stock back to where it started a year ago.
Following the firm bounce in price, Kangxi Communication Technologies (Shanghai) may be sending strong sell signals at present with a price-to-sales (or “P/S”) ratio of 15x, when you consider almost half of the companies in the Semiconductor industry in China have P/S ratios under 6.6x and even P/S lower than 3x aren’t out of the ordinary. Although, it’s not wise to just take the P/S at face value as there may be an explanation why it’s so lofty.
