GRAND BAOXIN AUTO GR

1293
End-of-day quote. End-of-day quote  - 10/23
1.13HKD +2.73%

Grand Baoxin Auto Group Limited : The downward trend is still in force

Nicolas Aleksy
Contributor / Partner

Strategy published on : 09/23/2020 | 04:42

short sell
Stop-loss triggered

Entry price : 1.15HKD
Target : 0.9HKD
Stop-loss : 1.19HKD
Potential : 21.74%

The pullback that could be observed for stocks in Grand Baoxin Auto Group Limited for several weeks should continue over the coming trading sessions.
Investors should open a short trade and target the HKD 0.9.

Strengths

● The stock, which is currently worth 2020 to 0.31 times its sales, is clearly overvalued in comparison with peers.

● Its low valuation, with P/E ratio at 7.18 and 4.7 for the ongoing fiscal year and 2021 respectively, makes the stock pretty attractive with regard to earnings multiples.

● The difference between current prices and the average target price is rather important and implies a significant appreciation potential for the stock.


Weaknesses

● The company has insufficient levels of profitability.

● Financial statements have repeatedly disappointed market stakeholders. Most often, they were below expectations.

● The company is not the most generous with respect to shareholders' compensation.

● The company's sales previsions for the coming years have been revised downwards, which foreshadows another slowdown in business.

● For the last twelve months, sales expectations have been significantly downgraded, which means that less important sales volumes are expected for the current fiscal year over the previous period.

● Analysts covering the stock have recently lowered their earnings forecast.

● For the last few months, analysts have been revising downwards their earnings forecast.

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