Shanghai New Centurion Network Information Technology Co., Ltd. (SHSE:605398) shares have continued their recent momentum with a 28% gain in the last month alone. The last 30 days bring the annual gain to a very sharp 39%.
Since its price has surged higher, Shanghai New Centurion Network Information Technology’s price-to-earnings (or “P/E”) ratio of 79.7x 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 19x are quite common. However, the P/E might be quite high for a reason and it requires further investigation to determine if it’s justified.
For instance, Shanghai New Centurion Network Information Technology’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, which has kept the P/E…
