Stock Analysis

Why Investors Shouldn't Be Surprised By Lonking Holdings Limited's (HKG:3339) 42% Share Price Surge

SEHK:3339
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Lonking Holdings Limited (HKG:3339) shareholders have had their patience rewarded with a 42% share price jump in the last month. The last 30 days bring the annual gain to a very sharp 90%.

Although its price has surged higher, it's still not a stretch to say that Lonking Holdings' price-to-earnings (or "P/E") ratio of 10.7x right now seems quite "middle-of-the-road" compared to the market in Hong Kong, where the median P/E ratio is around 12x. However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/E.

Lonking Holdings certainly has been doing a good job lately as it's been growing earnings more than most other companies. One possibility is that the P/E is moderate because investors think this strong earnings performance might be about to tail off. If not, then existing shareholders have reason to be feeling optimistic about the future direction of the share price.

View our latest analysis for Lonking Holdings

pe-multiple-vs-industry
SEHK:3339 Price to Earnings Ratio vs Industry July 22nd 2025
If you'd like to see what analysts are forecasting going forward, you should check out our free report on Lonking Holdings.
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How Is Lonking Holdings' Growth Trending?

Lonking Holdings' P/E ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the market.

If we review the last year of earnings growth, the company posted a terrific increase of 58%. However, this wasn't enough as the latest three year period has seen a very unpleasant 20% drop in EPS in aggregate. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.

Looking ahead now, EPS is anticipated to climb by 15% per annum during the coming three years according to the three analysts following the company. That's shaping up to be similar to the 15% each year growth forecast for the broader market.

With this information, we can see why Lonking Holdings is trading at a fairly similar P/E to the market. It seems most investors are expecting to see average future growth and are only willing to pay a moderate amount for the stock.

The Final Word

Lonking Holdings appears to be back in favour with a solid price jump getting its P/E back in line with most other companies. Typically, we'd caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

We've established that Lonking Holdings maintains its moderate P/E off the back of its forecast growth being in line with the wider market, as expected. At this stage investors feel the potential for an improvement or deterioration in earnings isn't great enough to justify a high or low P/E ratio. It's hard to see the share price moving strongly in either direction in the near future under these circumstances.

Don't forget that there may be other risks. For instance, we've identified 1 warning sign for Lonking Holdings that you should be aware of.

You might be able to find a better investment than Lonking Holdings. If you want a selection of possible candidates, check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.

About SEHK:3339

Lonking Holdings

An investment holding company, manufactures and distributes wheel loaders, road rollers, excavators, forklifts, and other construction machinery in Mainland China and internationally.

Flawless balance sheet with proven track record and pays a dividend.

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