Risks To Shareholder Returns Are Elevated At These Prices For Chanjet Information Technology Company Limited (HKG:1588)

Simply Wall St.02-03

There wouldn't be many who think Chanjet Information Technology Company Limited's (HKG:1588) price-to-sales (or "P/S") ratio of 2.1x is worth a mention when the median P/S for the Software industry in...

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However, investors might be overlooking a clear opportunity or potential setback if there is no rational basis for the P/S.     This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.  View our latest analysis for Chanjet Information Technology SEHK:1588 Price to Sales Ratio vs Industry February 2nd 2026Advertisement How Has Chanjet Information Technology Performed Recently?  Recent times haven't been great for Chanjet Information Technology as its revenue has been rising slower than most other companies.   Perhaps the market is expecting future revenue performance to lift, which has kept the P/S from declining.  However, if this isn't the case, investors might get caught out paying too much for the stock.      If you'd like to see what analysts are forecasting going forward, you should check out our free report on Chanjet Information Technology.  How Is Chanjet Information Technology's Revenue Growth Trending?   There's an inherent assumption that a company should be matching the industry for P/S ratios like Chanjet Information Technology's to be considered reasonable.   If we review the last year of revenue growth, the company posted a worthy increase of 13%.   The latest three year period has also seen an excellent 39% overall rise in revenue, aided somewhat by its short-term performance.  Therefore, it's fair to say the revenue growth recently has been superb for the company.     Turning to the outlook, the next three years should generate growth of 19%  each year as estimated by the sole analyst watching the company.  Meanwhile, the rest of the industry is forecast to expand by 24% each year, which is noticeably more attractive.  With this in mind, we find it intriguing that Chanjet Information Technology's P/S is closely matching its industry peers.  Apparently many investors in the company are less bearish than analysts indicate and aren't willing to let go of their stock right now.  Maintaining these prices will be difficult to achieve as this level of revenue growth is likely to weigh down the shares eventually.    The Key Takeaway  Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.  Given that Chanjet Information Technology's revenue growth projections are relatively subdued in comparison to the wider industry, it comes as a surprise to see it trading at its current P/S ratio.  When we see companies with a relatively weaker revenue outlook compared to the industry, we suspect the share price is at risk of declining, sending the moderate P/S lower.  A positive change is needed in order to justify the current price-to-sales ratio.      Many other vital risk factors can be found on the company's balance sheet.  You can assess many of the main risks through our free balance sheet analysis for Chanjet Information Technology with six simple checks.   If companies with solid past earnings growth is up your alley, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios. New: AI Stock Screener & AlertsOur new AI Stock Screener scans the market every day to uncover opportunities.• Dividend Powerhouses (3%+ Yield)• Undervalued Small Caps with Insider Buying• High growth Tech and AI CompaniesOr build your own from over 50 metrics.Explore Now for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"tenantId":"TBGLOBAL","deviceId":"web-server-community-laohu8-v3","version":"4.36.2","shortVersion":"4.36.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2608106978","isCrawlerRequest":true}