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Yangtze Optical Fibre And Cable Joint Stock Limited Company's (HKG:6869) P/E Is Still On The Mark Following 27% Share Price Bounce

Simply Wall St · 2d ago

Those holding Yangtze Optical Fibre And Cable Joint Stock Limited Company (HKG:6869) shares would be relieved that the share price has rebounded 27% in the last thirty days, but it needs to keep going to repair the recent damage it has caused to investor portfolios. The annual gain comes to 268% following the latest surge, making investors sit up and take notice.

Since its price has surged higher, Yangtze Optical Fibre And Cable Limited's price-to-earnings (or "P/E") ratio of 50.2x might make it look like a strong sell right now compared to the market in Hong Kong, where around half of the companies have P/E ratios below 12x and even P/E's below 7x are quite common. However, the P/E might be quite high for a reason and it requires further investigation to determine if it's justified.

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While the market has experienced earnings growth lately, Yangtze Optical Fibre And Cable Limited's earnings have gone into reverse gear, which is not great. One possibility is that the P/E is high because investors think this poor earnings performance will turn the corner. You'd really hope so, otherwise you're paying a pretty hefty price for no particular reason.

Check out our latest analysis for Yangtze Optical Fibre And Cable Limited

pe-multiple-vs-industry
SEHK:6869 Price to Earnings Ratio vs Industry December 10th 2025
Want the full picture on analyst estimates for the company? Then our free report on Yangtze Optical Fibre And Cable Limited will help you uncover what's on the horizon.

Is There Enough Growth For Yangtze Optical Fibre And Cable Limited?

The only time you'd be truly comfortable seeing a P/E as steep as Yangtze Optical Fibre And Cable Limited's is when the company's growth is on track to outshine the market decidedly.

Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 43%. This means it has also seen a slide in earnings over the longer-term as EPS is down 44% in total over the last three years. Therefore, it's fair to say the earnings growth recently has been undesirable for the company.

Looking ahead now, EPS is anticipated to climb by 110% during the coming year according to the four analysts following the company. That's shaping up to be materially higher than the 21% growth forecast for the broader market.

With this information, we can see why Yangtze Optical Fibre And Cable Limited is trading at such a high P/E compared to the market. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Final Word

The strong share price surge has got Yangtze Optical Fibre And Cable Limited's P/E rushing to great heights as well. We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

As we suspected, our examination of Yangtze Optical Fibre And Cable Limited's analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E. At this stage investors feel the potential for a deterioration in earnings isn't great enough to justify a lower P/E ratio. Unless these conditions change, they will continue to provide strong support to the share price.

You should always think about risks. Case in point, we've spotted 2 warning signs for Yangtze Optical Fibre And Cable Limited you should be aware of.

Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on a low P/E.