Stock Valuation: BOE Technology Group Co Ltd (725)

Name of Company Country of Origin/ Exchange Traded Sector Stock Price
BOE TECHNOLOGY GROUP CO LTD China/
SZSE
Technology – Computer Hardware – Electronic Components CNY3.76
@ 01 Aug 2018
COMPANY PROFILE BOE Technology Group Co Ltd is engaged in the development, manufacture and sales of panel and module for TFT-LCD and AM-OLED. Its segments include display parts, smart system and healthcare services.

BOE Technology Group Co Ltd is a China-based supplier of internet of things technologies, products and services. Its core business includes display devices, intelligent systems and health services. Display parts segment involves the development, manufacture and sales of panel and module for TFT-LCD and AMOLED. Its products are widely used in a broad spectrum of applications such as mobile phone, tablet, notebook, monitor, TV, vehicle display, digital information display, healthcare, finance, and wearable devices. The company generates majority of its revenue from the Display device segment.

Stock Code 725
Stock Valuation Below

BOE Technology Group Price to Sales

The Price to Sales Ratio is a commonly used valuation indicator for a stock. While not as popular as the Price to Earnings Ratio, it overcomes some of the limitations of the PE Ratio in that it can be used even when the company is not making a profit or only making minimal profits. However, it should not be used by itself because a company may be achieving sales but not profits.
At the price of CNY3.76 as at 01 Aug 2018, Boe Technology Group Co Ltd is trading at a Price to Sales Ratio of 1.2 times last 12 months sales.  This is a 27.0% discount to its historical average Price to Sales Ratio of 1.5 times.
Is the stock undervalued? One should not just look at one indicator to determine the fair value of a stock.
ProThinker believes in using a combination of valuation methods to decide whether a stock is over or undervalued? The five ratios we use are Price to Earnings, Price to Sales, Price to Cash Flow, Price to Book and Dividend Yield. We use multiple methods to value a stock because each has its benefits as well as shortcomings. Price to Earnings and Price to Cash Flow Ratios relate stock price to profitability but are meaningless when the comany has negative earnings or cash flows. Price to Sales Ratio is more stable because sales are never negative. However, this does not tell us whether the company is able to sell profitably. Price to Book Ratio gives us an indication as to how much we are paying for the company’s assets but it is not directly related to the company’s profitability. Dividend Yield cannot be used for companies that are paying little to no dividends.
While it is important to value stocks based on multiple valuation methods, this often leads to differing views on valuation. One indicator may suggest that a stock is overvalued while another suggest that it is undervalued. This does not help an investor who needs to make a definite decision whether to buy, hold or sell the stock. That is why we advocate the use of a Composite Valuation Indicator, which is derived from the best combination of the five indicators above. A Composite Valuation Indicator will give you ONE conclusion on whether a stock is under or over valued.
To find out more about our valuation methodology, click here. 
Source of Data: Charts are from ProThinker Stock Report. Company description, historical financial statements data and price data are from gurufocus.com. Estimates are from gurufocus and/or 4-traders.com – Thomson Reuters.
Disclaimer: This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither ProThinker nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of ProThinker. Copyright(c) 2018. All rights reserved.

 

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