A Look at Zhuzhou CRRC Times Electric (SEHK:3898) Valuation Following Major CRRC Group Agreement Proposal

Zhuzhou CRRC Times Electric (SEHK:3898) is drawing attention as it announced an extraordinary general meeting for December to discuss the 2026 to 2028 Mutual Supply Agreement with CRRC Group. Investors are eyeing the event’s implications for ongoing transactions and sector positioning.

See our latest analysis for Zhuzhou CRRC Times Electric.

Zhuzhou CRRC Times Electric has had a notable year, with its share price climbing 22.4% year-to-date and total shareholder return over the past twelve months reaching an impressive 47%. Recent excitement around the upcoming agreement with CRRC Group comes after a period of strong momentum. However, short-term share price pressure suggests the market is carefully weighing both growth potential and perceived risks as the story develops.

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With shares trading at a 16% discount to analyst targets and strong double-digit earnings growth, the question now is whether the market is overlooking value or factoring in all the company’s future progress. Could this be a buying opportunity?

Price-to-Earnings of 12x: Is it justified?

Zhuzhou CRRC Times Electric currently trades at a price-to-earnings (P/E) ratio of 12x, which makes its valuation notably cheaper than several of its peers and the broader sector. With the last close at HK$38.6, the stock stands out as undervalued against such comparatives.

The price-to-earnings ratio measures how much investors are willing to pay today for every dollar of company earnings. It is commonly used to gauge value and sentiment, especially in the industrial and machinery sector where earnings consistency can signal strength.

At 12x earnings, the market seems to be cautious, factoring in modest earnings growth while potentially overlooking recent profit improvements. This valuation invites debate on whether growth potential or risk are properly balanced in the current price.

Compared to the peer average of 15.5x and the Hong Kong Machinery industry average of 12.2x, Zhuzhou CRRC Times Electric sits at an attractive discount. This may hint at possible re-rating if performance continues. The estimated “fair” P/E ratio, according to regression analysis, is also 12x, suggesting the market may already be pricing the stock close to modelled expectations.

Explore the SWS fair ratio for Zhuzhou CRRC Times Electric

Result: Price-to-Earnings of 12x (ABOUT RIGHT)

However, slower revenue growth or unexpected challenges in international markets could quickly change the outlook for Zhuzhou CRRC Times Electric.

Find out about the key risks to this Zhuzhou CRRC Times Electric narrative.

Another View: Testing Value with the SWS DCF Model

While the price-to-earnings ratio points to fair value, our SWS DCF model suggests a different story. By forecasting future cash flows, this method values Zhuzhou CRRC Times Electric far above its current share price. This could indicate that the market is overlooking further potential, raising the question of whether there may be more opportunity than the multiples suggest.

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 Zhuzhou CRRC Times 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 920 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 Zhuzhou CRRC Times Electric Narrative

If you want to dig into the numbers yourself or have a different perspective, you can build a personal view using our tools in just minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Zhuzhou CRRC Times Electric.

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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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