China Galaxy Securities (SEHK:6881): Fresh Results and Dividend Spark Valuation Rethink

China Galaxy Securities (SEHK:6881) just released fresh numbers for the first nine months of 2025, showing clear gains in both revenue and net income. The company also unveiled a sizable interim dividend, giving shareholders an additional factor to consider.

See our latest analysis for China Galaxy Securities.

China Galaxy Securities has seen real momentum in its share price lately, thanks to rising profits, the fresh interim dividend, and a slate of governance changes following the abolishment of its Supervisory Committee. The current share price is HK$11.37, reflecting a year-to-date share price return of over 71%. The one-year total shareholder return sits at an impressive 43%. Over the longer term, anyone holding on for three years has seen their total shareholder return surge by more than 300%. This highlights how much sentiment and earnings have improved.

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With such impressive returns and strong recent results, investors may wonder whether China Galaxy Securities remains undervalued or if the market has already factored in these gains, leaving little room for further upside.

Price-to-Earnings of 8.9x: Is it justified?

China Galaxy Securities currently trades at a price-to-earnings ratio of 8.9x, significantly below many of its peers. With the last close at HK$11.37, this suggests the market might be underappreciating the company’s recent performance and future earnings potential.

The price-to-earnings (P/E) ratio measures how much investors are willing to pay for each dollar of earnings. For a capital markets company like China Galaxy Securities, P/E is a widely watched valuation tool, as it reflects market expectations for ongoing profit levels.

With earnings growing strongly over the past year, this relatively low P/E could indicate investors remain cautious about sustainability or long-term growth. It may also suggest that the share price has not yet caught up with improved profitability.

Compared to the Hong Kong Capital Markets industry average of 23x, China Galaxy Securities is trading at a deep discount. Against its estimated fair P/E ratio of 13.9x, the current valuation is still undemanding, leaving room for potential market re-rating if profit momentum continues or outlook improves.

Explore the SWS fair ratio for China Galaxy Securities

Result: Price-to-Earnings of 8.9x (UNDERVALUED)

However, near-term volatility in earnings or any slowdown in net income growth could challenge the bullish sentiment and prompt a reassessment of upside potential.

Find out about the key risks to this China Galaxy Securities narrative.

Another View: Discounted Cash Flow Says Shares Are Undervalued

While a low price-to-earnings ratio paints China Galaxy Securities as discounted, the SWS DCF model also points to value. It estimates a fair value of HK$12.85 per share. With the current price 11.5% below this benchmark, could the market still be too pessimistic?

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 China Galaxy Securities 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 848 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 China Galaxy Securities Narrative

If you want to interpret the story yourself or take a hands-on approach to the numbers, you can craft your own perspective in minutes. Do it your way

A great starting point for your China Galaxy Securities research is our analysis highlighting 4 key rewards 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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