In recent months, Hong Kong stocks have fallen overnight, especially for small and medium-sized stocks with poor liquidity. They have fallen the most, and many small-cap stocks with a price-to-earnings ratio as low as four or five times have begun to appear in the market. Low, I feel that the valuation, the stock price has not bottomed out, it seems that the low is not low.
In the past, there have been a number of small-cap stocks with a valuation of only 4 or 5 times, such as the semi-new stock Time Intercon (01729), Xingfang Holdings (01968), Huaxin handbags (02683), and even Xingfa Aluminum (00098). ); and the expected P/E ratio is as low as 5 times, including Otis Group (01161) and Luen Thai Holdings (00311). Even though the valuation seems to be very cheap, the stock price is still falling steadily. If you fall, you will doubt whether these companies will see a significant deterioration in their performance in the coming year, so the market reflects in advance?
Obviously, these small-cap stocks face unclear domestic economic prospects, intensified trade wars, and large fluctuations in performance are inevitable. It can even be said that the chances of retrogression in the coming year are very high. The continuous downward adjustment of the valuation reflects the uncertainty of the performance, and therefore even if the valuation has fallen to extreme disability, it is not possible to open a large position, only to absorb in part, diversify the investment, only because the current stock price rises and falls is caused by market sentiment. The atmosphere determines that when everyone is panicking and pessimistic, perhaps next month we are talking about small stocks with a price-to-earnings ratio of 2 or 3 times.