Star Plus Legend Holdings (SEHK:6683): Assessing Valuation Following Quadruped Robot IP Deal With ADATA Technology

Star Plus Legend Holdings (SEHK:6683) has announced that its subsidiary, Star Plus IP, entered into a sales contract with ADATA Technology for 1,000 quadruped robots valued at over RMB 20 million. This agreement signals a strong move into quadruped robot IP commercialization and reflects a broadening of the company's growth strategy.

See our latest analysis for Star Plus Legend Holdings.

Following this IP commercialization breakthrough, Star Plus Legend Holdings has seen major swings in its share price. After a stellar year-to-date share price return of 86.51% and a robust 1-year total shareholder return of 105.72%, short-term momentum has faded recently. This suggests investors are weighing near-term profit-taking against longer-term growth prospects.

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But with shares pulling back after strong gains, the big question now is whether the market is offering a genuine entry point or if Star Plus Legend’s future growth is already fully reflected in the price.

Price-to-Sales Ratio of 11x: Is it justified?

Star Plus Legend Holdings trades at a price-to-sales (P/S) ratio of 11x, with the last close price at HK$8.99. This is substantially higher than both its peer group and the broader industry.

The price-to-sales ratio reflects how much investors are currently willing to pay for each dollar of Star Plus Legend's sales. High P/S multiples are typically warranted when investors foresee rapid, sustainable growth or industry-leading margins in the future.

At 11x, the company is being valued at a steep premium. By comparison, peers average a P/S of just 0.9x. The Hong Kong food industry sits even lower at 0.7x. This signals that much of the company’s future potential may already be priced in, and the premium stands well above what the market tends to reward for this sector.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Sales Ratio of 11x (OVERVALUED)

However, limited industry growth data and the company's lofty valuation could pose significant risks if revenue or net income momentum disappoints in the future.

Find out about the key risks to this Star Plus Legend Holdings narrative.

Build Your Own Star Plus Legend Holdings Narrative

If you want to look deeper or have your own take, you can review the numbers and shape your own perspective in just a few minutes, then Do it your way

A great starting point for your Star Plus Legend Holdings research is our analysis highlighting 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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