Harbin Electric (SEHK:1133) Valuation Check After HSBC’s Bullish Call on Its Clean Power Role

HSBC Global Research has just spotlighted Harbin Electric (SEHK:1133), highlighting its role in nuclear and hydropower supply as China wrestles with energy oversupply and fast rising demand from AI driven data centers.

See our latest analysis for Harbin Electric.

The HSBC call lands on a stock that has already been on a tear, with a roughly 66% 3 month share price return and a near fivefold 1 year total shareholder return, suggesting momentum is still very much intact despite only modest recent boardroom changes.

If this shift toward AI hungry infrastructure has your attention, it might be a good time to see what else is setting up for growth among high growth tech and AI stocks.

With shares still trading at a steep discount to HSBC’s target despite explosive recent gains, the key question now is whether Harbin Electric remains undervalued or if the market is already pricing in years of future growth.

Price-to-Earnings of 13.6x: Is it justified?

On a trailing price-to-earnings ratio of 13.6x at the last close of HK$14.8, Harbin Electric screens as undervalued versus peers despite its sharp share price rally.

The price-to-earnings multiple links what investors are willing to pay today with the company’s current level of reported profits, a key gauge for a mature, cash generative industrial such as Harbin Electric.

Harbin Electric’s 13.6x earnings multiple sits well below the peer average of 48.5x and under the estimated fair price-to-earnings ratio of 16.1x, suggesting the market is still assigning a noticeable discount to its profit power even after a year of outsized gains.

Compared with both the wider Asian electrical industry on 31.2x and the more focused electrical peer set on 48.5x, Harbin Electric’s 13.6x multiple looks strikingly conservative, implying investors have yet to fully re-rate the stock toward levels that similar businesses already command and that it could move closer to the fair ratio over time if growth and margins hold up.

Explore the SWS fair ratio for Harbin Electric

Result: Price-to-Earnings of 13.6x (UNDERVALUED)

However, investors still face key risks, including policy shifts on nuclear and hydropower spending, as well as a slowdown in power equipment orders from data center projects.

Find out about the key risks to this Harbin Electric narrative.

Another View: DCF Flags a Richer Price

While earnings multiples point to value, our DCF model suggests Harbin Electric is actually trading above fair value, with HK$14.8 versus an SWS DCF fair value of HK$11.28. Is the market overpaying for long term growth or underestimating future cash flows?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Harbin Electric for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 907 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Harbin Electric Narrative

If you see the story differently or want to stress test the numbers yourself, you can build a fresh narrative in just a few minutes: Do it your way

A great starting point for your Harbin Electric research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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