After Leaping 38% Sino-Synergy Hydrogen Energy Technology (Jiaxing) Co., Ltd. (HKG:9663) Shares Are Not Flying Under The Radar

Sino-Synergy Hydrogen Energy Technology (Jiaxing) Co., Ltd. (HKG:9663) shareholders are no doubt pleased to see that the share price has bounced 38% in the last month, although it is still struggling to make up recently lost ground. Longer-term shareholders would be thankful for the recovery in the share price since it's now virtually flat for the year after the recent bounce.

After such a large jump in price, given around half the companies in Hong Kong's Electrical industry have price-to-sales ratios (or "P/S") below 0.5x, you may consider Sino-Synergy Hydrogen Energy Technology (Jiaxing) as a stock to avoid entirely with its 9.4x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's so lofty.

See our latest analysis for Sino-Synergy Hydrogen Energy Technology (Jiaxing)

What Does Sino-Synergy Hydrogen Energy Technology (Jiaxing)'s Recent Performance Look Like?

As an illustration, revenue has deteriorated at Sino-Synergy Hydrogen Energy Technology (Jiaxing) over the last year, which is not ideal at all. One possibility is that the P/S is high because investors think the company will still do enough to outperform the broader industry in the near future. If not, then existing shareholders may be quite nervous about the viability of the share price.

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Sino-Synergy Hydrogen Energy Technology (Jiaxing) will help you shine a light on its historical performance.

How Is Sino-Synergy Hydrogen Energy Technology (Jiaxing)'s Revenue Growth Trending?

The only time you'd be truly comfortable seeing a P/S as steep as Sino-Synergy Hydrogen Energy Technology (Jiaxing)'s is when the company's growth is on track to outshine the industry decidedly.

Retrospectively, the last year delivered a frustrating 6.4% decrease to the company's top line. Even so, admirably revenue has lifted 209% in aggregate from three years ago, notwithstanding the last 12 months. Although it's been a bumpy ride, it's still fair to say the revenue growth recently has been more than adequate for the company.

Comparing that to the industry, which is only predicted to deliver 19% growth in the next 12 months, the company's momentum is stronger based on recent medium-term annualised revenue results.

With this information, we can see why Sino-Synergy Hydrogen Energy Technology (Jiaxing) is trading at such a high P/S compared to the industry. Presumably shareholders aren't keen to offload something they believe will continue to outmanoeuvre the wider industry.

What We Can Learn From Sino-Synergy Hydrogen Energy Technology (Jiaxing)'s P/S?

The strong share price surge has lead to Sino-Synergy Hydrogen Energy Technology (Jiaxing)'s P/S soaring as well. We'd say the price-to-sales ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

We've established that Sino-Synergy Hydrogen Energy Technology (Jiaxing) maintains its high P/S on the strength of its recent three-year growth being higher than the wider industry forecast, as expected. In the eyes of shareholders, the probability of a continued growth trajectory is great enough to prevent the P/S from pulling back. Barring any significant changes to the company's ability to make money, the share price should continue to be propped up.

Plus, you should also learn about these 2 warning signs we've spotted with Sino-Synergy Hydrogen Energy Technology (Jiaxing).

It's important to make sure you look for a great company, not just the first idea you come across. So if growing profitability aligns with your idea of a great company, take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com