Hangzhou Huaxing Chuangye Communication Technology Co., Ltd. (SZSE:300025) has seen a significant increase in share price over the last month, with a gain of 40%. While the full-year gain of 23% is also reasonable, the company’s price-to-sales ratio of 9.5x may appear high compared to other companies in the Telecom industry in China.
The company’s financial performance has been concerning as revenue has been declining, which may be one reason for the elevated P/S ratio. With no analyst estimates available for Hangzhou Huaxing Chuangye Communication Technology, investors are left to wonder about the company’s future prospects.
The company’s revenue growth has been disappointing, with a decline of 4.2% last year and 8.0% over the last three years, while the industry is predicted to deliver 5.0% growth in the next 12 months. This raises concerns about the sustainability of the current share price and the optimism of investors.
Overall, the high P/S ratio and declining revenue trends pose a significant risk to existing shareholders’ investments and may deter prospective investors. While the recent boost in share price is positive, investors should consider the company’s financial performance and future prospects before making any decisions.
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