Yangtze Optical Fibre and Cable (SEHK:6869) Valuation After Governance Shake-Up at Extraordinary General Meeting

Yangtze Optical Fibre And Cable Limited (SEHK:6869) just pushed through a substantial governance shake up at its latest extraordinary general meeting, scrapping its supervisory board and refreshing the non executive lineup with two new directors.

See our latest analysis for Yangtze Optical Fibre And Cable Limited.

The governance reset comes after a huge run, with the share price up 188% year to date and a 214% one year total shareholder return, even though recent three month share price performance shows momentum cooling slightly.

If this shake up has you rethinking the broader tech opportunity, it could be worth scanning high growth tech and AI stocks for other potential high growth names on your radar.

With earnings growing fast and the share price already surging, the key question now is whether Yangtze Optical is still trading below its fundamentals, or if the market is already pricing in the next leg of growth?

Price-to-Earnings of 41.8x: Is it justified?

On a price-to-earnings ratio of 41.8x at the last close of HK$35.08, Yangtze Optical screens as expensive versus peers and its own fair ratio.

The price-to-earnings, or P E, compares what investors pay for each unit of current earnings. For a fast growing communications equipment name with forecast earnings growth above the wider Hong Kong market, a richer P E can signal that investors are already factoring in a strong profit recovery and future expansion.

Here, the market is paying meaningfully more for each dollar of earnings than both the estimated fair P E of 34.6x and the peer average of 15.2x. At the same time, the stock still trades about 19.8% below the HK$43.76 fair value from our DCF model. That combination suggests sentiment is skewed toward optimistic profit and revenue trajectories rather than current margins and return on equity.

Against the Asian communications industry average P E of 34.7x, Yangtze Optical's 41.8x multiple stands out as a clear premium that assumes it can outperform the sector on growth and quality over time, even after a year of weaker reported earnings.

Explore the SWS fair ratio for Yangtze Optical Fibre And Cable Limited

Result: Price-to-Earnings of 41.8x (OVERVALUED)

However, investors should watch for a sharper slowdown in demand or margin pressure from rising competition, as this could challenge the bullish growth assumptions embedded in the valuation.

Find out about the key risks to this Yangtze Optical Fibre And Cable Limited narrative.

Another View: DCF Points to Upside

While the current P E of 41.8x looks stretched, our DCF model tells a different story and suggests fair value closer to HK$43.76, around 19.8% above today’s HK$35.08 price. If cash flows are right, is the market still underestimating the recovery?

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 Yangtze Optical Fibre And Cable Limited 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 906 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 Yangtze Optical Fibre And Cable Limited Narrative

If you see the numbers differently or want to stress test your own assumptions, you can build a personalised view in just a few minutes: Do it your way.

A great starting point for your Yangtze Optical Fibre And Cable Limited research is our analysis highlighting 3 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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