A Look at China Everbright (SEHK:165) Valuation Following Successful RMB 1.5B Medium-Term Note Issuance

China Everbright (SEHK:165) just wrapped up the second tranche of its 2025 medium-term notes, raising RMB 1.5 billion through a fixed-rate corporate bond. This move reinforces the company’s liquidity and represents another step in its financing activity.

See our latest analysis for China Everbright.

After a volatile few months, China Everbright’s 1-day share price return of 0.68% and steady performance over the last quarter suggest that investor sentiment is stabilizing as the company shores up liquidity. Despite some short-term bumps, the 77% year-to-date share price return and 75% total shareholder return over the last year indicate that momentum is still building in the stock.

If this kind of resilience catches your attention, now could be a smart time to broaden your search and discover fast growing stocks with high insider ownership

With such strong gains and improving liquidity, the key question now is whether China Everbright is still trading at a bargain or if all the good news has already been reflected in the price. This could mean there may be limited upside for new investors.

Price-to-Sales Ratio of 6.3x: Is it justified?

China Everbright trades at a price-to-sales ratio of 6.3x, which is above the Hong Kong Capital Markets industry average of 4.9x. At the most recent close of HK$8.94, this indicates that investors are willing to pay a premium for every dollar of revenue compared to industry peers.

The price-to-sales ratio measures how much investors are paying per dollar of company revenue. This metric is often used for unprofitable companies like China Everbright, where traditional profit multiples offer limited insight. In capital markets, this ratio frequently reflects growth expectations and market confidence in management's ability to convert revenue into future profits.

China Everbright's above-average price-to-sales ratio suggests the market may be pricing in significant future revenue growth or a possible turnaround in profitability. The company's revenue is forecast to grow at a faster pace than both the industry and the wider Hong Kong market. However, losses have increased over the past five years, and the company remains unprofitable. This premium may reflect optimism around projected growth, but it also emphasizes that current value is primarily based on revenue expectations rather than current earnings. Compared to its peer group average of 20x, its valuation appears low, but relative to the industry average, it is expensive. The estimated fair price-to-sales ratio for China Everbright stands at 7.3x, indicating there could be additional potential for upward adjustment if growth targets are achieved.

Explore the SWS fair ratio for China Everbright

Result: Preferred multiple of price-to-sales 6.3x (ABOUT RIGHT)

However, slowing revenue growth or delays in achieving profitability could dampen sentiment and pose potential risks to the current positive outlook.

Find out about the key risks to this China Everbright narrative.

Build Your Own China Everbright Narrative

Keep in mind, if you see things differently or want to take a hands-on approach, you can craft your own view in just a few minutes. Do it your way

A great starting point for your China Everbright research is our analysis highlighting 1 key reward and 2 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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