Shanghai Sinotec Co., Ltd. (SHSE:603121) shares have continued their recent momentum with a 30% gain in the last month alone. The last 30 days bring the annual gain to a very sharp 65%.
Following the firm bounce in price, Shanghai Sinotec’s price-to-earnings (or “P/E”) ratio of 50.4x 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 34x and even P/E’s below 19x are quite common. However, the P/E might be high for a reason and it requires further investigation to determine if it’s justified.
Recent times have been quite advantageous for Shanghai Sinotec as its earnings have been rising very briskly. It seems that many are expecting the strong earnings performance to beat most other companies over the coming period, which has increased investors’ willingness to pay up for the stock. You’d really hope so, otherwise you’re paying a pretty…
