Assessing HBM Holdings (SEHK:2142) Valuation Following AI Breakthrough and Positive Phase II Oncology Data

HBM Holdings (SEHK:2142) is drawing investor interest after unveiling its fully human generative AI HCAb model, which is aimed at accelerating antibody discovery. The company also shared encouraging Phase II data for its anti-CTLA-4 therapy in oncology.

See our latest analysis for HBM Holdings.

After a year that saw HBM Holdings deliver a remarkable 590.91% share price return year-to-date, and an extraordinary 1,040% total shareholder return over one year, the latest AI platform launch and promising clinical data have clearly caught the market’s attention. Momentum has been strong in recent months, with the share price climbing 41.47% in the last 90 days, despite some short-term pullback.

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With shares riding a stunning rally and innovation headlines multiplying, the key question for investors is whether HBM Holdings remains undervalued or if the market has already priced in all the optimism ahead.

Price-to-Earnings of 20.2x: Is it justified?

HBM Holdings currently trades at a price-to-earnings (P/E) ratio of 20.2x, noticeably lower than both its industry and peer group averages. At last close (HK$13.68), this positions the stock as relatively inexpensive compared to competitors in the Asian biotech segment.

The P/E ratio reflects how much investors are willing to pay today for each Hong Kong dollar of earnings generated. In the biotech sector, high multiples often signal market confidence in a company’s future profit growth potential or unique IP advantages.

HBM’s multiple stands out because it is far below the Asian biotech industry average of 43.7x and the peer group’s 82.4x. This sharp disconnect suggests that the company may be underappreciated for its recent profitability surge and accelerating margins. However, it is worth noting that while the 20.2x multiple compares well to peers, it sits above the fair P/E estimated for the business (16.6x), a level that could act as a magnet for future price moves as expectations reset.

Explore the SWS fair ratio for HBM Holdings

Result: Price-to-Earnings of 20.2x (UNDERVALUED)

However, persistent declines in revenue and net income growth could temper optimism if operational challenges continue to pressure the underlying financial performance.

Find out about the key risks to this HBM Holdings narrative.

Another View: Discounted Cash Flow Tells a Different Story

For a fresh perspective, our DCF model estimates HBM Holdings’ fair value at HK$6.29 per share, which is well below the current share price of HK$13.68. This suggests that the recent rally might have lifted the stock above its underlying valuation. Could market optimism be running ahead of fundamentals?

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 HBM Holdings 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 845 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 HBM Holdings Narrative

If you want a different perspective or enjoy drawing your own conclusions from the numbers, you can craft a unique story for HBM Holdings in just a few minutes. Do it your way.

A great starting point for your HBM Holdings research is our analysis highlighting 2 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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