Biocytogen Pharmaceuticals (Beijing) Co., Ltd. (HKG:2315) Stock Catapults 32% Though Its Price And Business Still Lag The Industry

The Biocytogen Pharmaceuticals (Beijing) Co., Ltd. (HKG:2315) share price has done very well over the last month, posting an excellent gain of 32%. This latest share price bounce rounds out a remarkable 372% gain over the last twelve months.

In spite of the firm bounce in price, Biocytogen Pharmaceuticals (Beijing) may still be sending bullish signals at the moment with its price-to-sales (or "P/S") ratio of 9.1x, since almost half of all companies in the Biotechs industry in Hong Kong have P/S ratios greater than 17.4x and even P/S higher than 58x are not unusual. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

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View our latest analysis for Biocytogen Pharmaceuticals (Beijing)

What Does Biocytogen Pharmaceuticals (Beijing)'s Recent Performance Look Like?

With revenue growth that's exceedingly strong of late, Biocytogen Pharmaceuticals (Beijing) has been doing very well. It might be that many expect the strong revenue performance to degrade substantially, which has repressed the P/S ratio. Those who are bullish on Biocytogen Pharmaceuticals (Beijing) will be hoping that this isn't the case, so that they can pick up the stock at a lower valuation.

We don't have analyst forecasts, but you can see how recent trends are setting up the company for the future by checking out our free report on Biocytogen Pharmaceuticals (Beijing)'s earnings, revenue and cash flow.

Is There Any Revenue Growth Forecasted For Biocytogen Pharmaceuticals (Beijing)?

The only time you'd be truly comfortable seeing a P/S as low as Biocytogen Pharmaceuticals (Beijing)'s is when the company's growth is on track to lag the industry.

Taking a look back first, we see that the company grew revenue by an impressive 49% last year. The strong recent performance means it was also able to grow revenue by 163% in total over the last three years. Therefore, it's fair to say the revenue growth recently has been superb for the company.

Comparing that to the industry, which is predicted to deliver 555% growth in the next 12 months, the company's momentum is weaker, based on recent medium-term annualised revenue results.

In light of this, it's understandable that Biocytogen Pharmaceuticals (Beijing)'s P/S sits below the majority of other companies. Apparently many shareholders weren't comfortable holding on to something they believe will continue to trail the wider industry.

What Does Biocytogen Pharmaceuticals (Beijing)'s P/S Mean For Investors?

Despite Biocytogen Pharmaceuticals (Beijing)'s share price climbing recently, its P/S still lags most other companies. It's argued the price-to-sales ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.

Our examination of Biocytogen Pharmaceuticals (Beijing) confirms that the company's revenue trends over the past three-year years are a key factor in its low price-to-sales ratio, as we suspected, given they fall short of current industry expectations. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Unless the recent medium-term conditions improve, they will continue to form a barrier for the share price around these levels.

A lot of potential risks can sit within a company's balance sheet. Take a look at our free balance sheet analysis for Biocytogen Pharmaceuticals (Beijing) with six simple checks on some of these key factors.

If strong companies turning a profit tickle your fancy, then you'll want to check out this free list of interesting companies that trade on a low P/E (but have proven they can grow earnings).

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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.