A Look at Zhaojin Mining Industry's (SEHK:1818) Valuation Following New Blockchain and AI Partnership

Zhaojin Mining Industry (SEHK:1818) has entered into a strategic collaboration with Ant Digital Technologies to apply blockchain and AI advancements for digitizing its overseas gold assets and bolstering supply chain efficiency. This move is designed to support sustainability goals and aligns with national digital economy policies.

See our latest analysis for Zhaojin Mining Industry.

Zhaojin Mining Industry has delivered a remarkable run this year, with a year-to-date share price return of 158.14% and a 90-day surge of 30.33%. This momentum is putting it well ahead of the broader sector. These gains reflect growing optimism around recent tech-driven initiatives and stronger growth expectations, underscored by a three-year total shareholder return of 253.97%.

If you’re watching these tech-driven moves and want to see which other companies are gaining ground, now’s a timely moment to explore fast growing stocks with high insider ownership.

With these big advances reflected in recent share price gains, the key question now is whether Zhaojin Mining Industry's stock still offers value for new investors, or if future growth is already fully priced in.

Price-to-Earnings of 39.5x: Is it justified?

With a current Price-to-Earnings (P/E) ratio of 39.5x, Zhaojin Mining Industry trades at a steep premium to its sector peers and its own historical averages. This elevated multiple signals that the market has high expectations for sustained earnings growth following recent outperformance.

The P/E ratio measures what investors are willing to pay today for one unit of current earnings. In the metals and mining sector, it is a key signal of confidence in future profitability, which is especially significant given the cyclical nature of the industry and the company's recent technological advances.

However, the current price is expensive not just compared to the Hong Kong Metals and Mining industry average of 15.9x, but also against the peer average of 32.5x. Even relative to the estimated fair P/E of 22.1x, the stock is trading above what would typically be supported by fundamentals. This suggests a level the market could move toward if recent momentum fades.

Explore the SWS fair ratio for Zhaojin Mining Industry

Result: Price-to-Earnings of 39.5x (OVERVALUED)

However, sustained high expectations could be challenged if revenue growth slows or if industry volatility undermines recent gains.

Find out about the key risks to this Zhaojin Mining Industry narrative.

Another View: What Does the DCF Say?

Switching gears to our DCF model, there is a sharply different takeaway. According to this valuation, Zhaojin Mining Industry's share price is currently trading 59.7% below an estimated fair value of HK$73.11. This approach suggests compelling upside and challenges the message from traditional multiples. Which approach will prove more accurate as the story plays out?

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 Zhaojin Mining Industry 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 870 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 Zhaojin Mining Industry Narrative

If you see the data differently or want to dig deeper yourself, you can quickly put together your own analysis and perspective in just a few minutes, Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Zhaojin Mining Industry.

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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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