Shenzhen Investment (SEHK:604): Assessing Valuation After Strong Contracted Sales Growth in 2025

Shenzhen Investment (SEHK:604) has reported its unaudited contracted sales for the third quarter and first three quarters of 2025, showing total sales of RMB 9.8 billion with a 24% increase year-on-year.

See our latest analysis for Shenzhen Investment.

Despite ongoing challenges in China’s property sector, Shenzhen Investment’s upbeat sales update appears to have sparked renewed interest, with the share price gaining 3.5% over the past week to HK$0.89. Still, while short-term momentum is building, the longer-term picture remains tough. Total shareholder return sits at -8% over the last year and -51% over five years, reminding investors that both risks and opportunities coexist for the stock.

If this burst of momentum has you curious about broader opportunities in the market, consider exploring fast growing stocks with high insider ownership.

With sales momentum accelerating, but longer-term returns still in negative territory, the key question is whether Shenzhen Investment now trades at a bargain or if the recent gains simply reflect expectations for future growth.

Price-to-Sales of 0.4x: Is it justified?

At a price-to-sales ratio of 0.4x, Shenzhen Investment is trading well below both its industry and peer averages. This suggests the market may be discounting its future prospects.

The price-to-sales multiple measures how much investors are willing to pay for each unit of revenue. In the real estate sector, this is a useful yardstick, especially when earnings are negative or volatile, as is the case for Shenzhen Investment.

Right now, the company’s ratio is dramatically lower than the Hong Kong real estate industry average of 0.7x and far below the peer average of 3.7x. This gap could signal undervaluation if sales stabilize or improve, but it also reflects investor caution about future revenue trends. Notably, compared to an estimated fair price-to-sales of 0.6x, there is some room for market perceptions to shift if fundamentals recover.

Explore the SWS fair ratio for Shenzhen Investment

Result: Price-to-Sales of 0.4x (UNDERVALUED)

However, weak annual revenue growth and persistent negative long-term returns could signal ongoing caution from investors if fundamentals do not improve.

Find out about the key risks to this Shenzhen Investment narrative.

Another View: What Does Our DCF Model Say?

While the price-to-sales ratio points to Shenzhen Investment being undervalued versus peers and industry, our DCF model offers a markedly different perspective. Based on projected future cash flows, the model suggests the stock is actually trading above fair value. Could the market be factoring in more risk than the multiples show?

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 Shenzhen Investment 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 867 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 Shenzhen Investment Narrative

If you see things differently or want to dig deeper into the numbers, you can shape your own perspective and narrative in just a few minutes. Do it your way.

A great starting point for your Shenzhen Investment 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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