Shares of Hong Kong-based real estate developer New World Development Company Limited (HKG:17) plummeted by 5.09% on Wednesday, October 3, 2024, despite a recent 55% price jump. The stock's latest decline has raised concerns about the sustainability of its valuation, given the company's poor revenue performance and subdued growth projections.
Despite the recent surge, New World Development's shares have underperformed the broader market, with a 29% decline over the past twelve months. The company's price-to-sales ratio currently stands at 0.7x, which is in line with the industry average in Hong Kong. However, analysts have questioned whether this valuation is justified, considering the company's revenue has been declining.
According to financial data, New World Development's revenue decreased by a staggering 62% in the last year and has fallen by 48% overall compared to three years ago. Furthermore, analysts forecast the company's revenue growth to be a mere 1.8% per annum over the next three years, significantly lower than the industry's projected growth rate of 4.5%.
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