Despite an already strong run, Sichuan Mingxing Electric Power Co., Ltd. (SHSE:600101) shares have been powering on, with a gain of 25% in the last thirty days. Looking further back, the 10% rise over the last twelve months isn’t too bad notwithstanding the strength over the last 30 days.
Even after such a large jump in price, Sichuan Mingxing Electric Power may still be sending bullish signals at the moment with its price-to-earnings (or “P/E”) ratio of 29x, since almost half of all companies in China have P/E ratios greater than 33x and even P/E’s higher than 62x are not unusual. Nonetheless, we’d need to dig a little deeper to determine if there is a rational basis for the reduced P/E.
Earnings have risen firmly for Sichuan Mingxing Electric Power recently, which is pleasing to see. One possibility is that the P/E is low because investors think this respectable earnings growth might actually underperform the broader…
