Assessing Central New Energy Holding Group (SEHK:1735) Valuation After Strategic Green Methanol Partnership Announcement

Central New Energy Holding Group (SEHK:1735) just announced a strategic partnership with Jilin Province Huajin Energy. The focus is on developing green methanol and related new energy projects, which could broaden the company’s future opportunities.

See our latest analysis for Central New Energy Holding Group.

After some volatility earlier in the year, Central New Energy Holding Group’s 90-day share price return of 7.8% hints at growing optimism from investors, likely helped by its recent strategic shifts and innovative project launches. For those with a multi-year view, a remarkable 118% total shareholder return over three years shows that momentum has gathered behind the company as it transitions to greener energy opportunities.

If this energy sector story has you curious about other companies with a similar growth spark, now is the perfect time to see what you’ll discover in the fast growing stocks with high insider ownership.

With so much excitement around these partnerships and a history of strong returns, the big question remains: Is Central New Energy Holding Group’s recent momentum signaling an undervalued opportunity, or is the market already pricing in its growth potential?

Price-to-Sales of 5x: Is it justified?

Central New Energy Holding Group trades at a price-to-sales ratio of 5x, placing it well above both industry peers and sector averages. With a last close price of HK$9.00, the market is demanding a premium for every dollar of sales.

The price-to-sales (P/S) ratio compares a company’s market capitalization to its total sales and is often used in sectors where profit margins can vary but revenue is a common benchmark. For Central New Energy Holding Group, this means investors are paying five times the current annual revenue for each share, which is a steep ask for a construction sector name.

Compared to the Hong Kong Construction industry average of 0.3x, the company's P/S ratio stands out as particularly high. The data also shows it is expensive relative to the wider peer group and to its own fair price-to-sales ratio, which is estimated at 3x. This is a level the market could potentially move toward if expectations temper or sales growth lags.

Explore the SWS fair ratio for Central New Energy Holding Group

Result: Price-to-Sales of 5x (OVERVALUED)

However, rapid sales growth could slow down or sector sentiment may shift. This could potentially challenge the current valuation and momentum behind Central New Energy Holding Group.

Find out about the key risks to this Central New Energy Holding Group narrative.

Build Your Own Central New Energy Holding Group Narrative

If you see the story differently or want to dive deeper into the data, you can build your own view in just a few minutes. Do it your way.

A great starting point for your Central New Energy Holding Group research is our analysis highlighting 1 key reward and 3 important warning signs 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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