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Why Investors Shouldn't Be Surprised By China International Capital Corporation Limited's (HKG:3908) Low P/E

Simply Wall St · 1d ago

When close to half the companies in Hong Kong have price-to-earnings ratios (or "P/E's") above 13x, you may consider China International Capital Corporation Limited (HKG:3908) as an attractive investment with its 9.8x P/E ratio. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's limited.

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Recent times have been advantageous for China International Capital as its earnings have been rising faster than most other companies. It might be that many expect the strong earnings performance to degrade substantially, which has repressed the P/E. If not, then existing shareholders have reason to be quite optimistic about the future direction of the share price.

Check out our latest analysis for China International Capital

pe-multiple-vs-industry
SEHK:3908 Price to Earnings Ratio vs Industry December 18th 2025
If you'd like to see what analysts are forecasting going forward, you should check out our free report on China International Capital.

What Are Growth Metrics Telling Us About The Low P/E?

The only time you'd be truly comfortable seeing a P/E as low as China International Capital's is when the company's growth is on track to lag the market.

Taking a look back first, we see that the company grew earnings per share by an impressive 170% last year. Although, its longer-term performance hasn't been as strong with three-year EPS growth being relatively non-existent overall. Therefore, it's fair to say that earnings growth has been inconsistent recently for the company.

Turning to the outlook, the next year should bring diminished returns, with earnings decreasing 13% as estimated by the ten analysts watching the company. With the market predicted to deliver 21% growth , that's a disappointing outcome.

In light of this, it's understandable that China International Capital's P/E would sit below the majority of other companies. However, shrinking earnings are unlikely to lead to a stable P/E over the longer term. Even just maintaining these prices could be difficult to achieve as the weak outlook is weighing down the shares.

What We Can Learn From China International Capital's P/E?

Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

We've established that China International Capital maintains its low P/E on the weakness of its forecast for sliding earnings, as expected. Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises. It's hard to see the share price rising strongly in the near future under these circumstances.

The company's balance sheet is another key area for risk analysis. You can assess many of the main risks through our free balance sheet analysis for China International Capital with six simple checks.

If these risks are making you reconsider your opinion on China International Capital, explore our interactive list of high quality stocks to get an idea of what else is out there.