Yangtze Optical Fibre And Cable Limited (YOFC) saw its shares plummet 5.27% during intraday trading on Monday, marking a significant pullback for the optical fibre and cable manufacturer.
The sharp decline comes as analysts highlight valuation concerns following the stock's substantial recent gains. According to a valuation analysis, YOFC is trading at a price-to-sales ratio of 8.1x, which is significantly above both the Hong Kong Communications industry average of 1.1x and the peer average of 3.6x. The analysis flags the stock as "OVERVALUED" with an estimated fair P/S ratio of just 2.5x.
Further compounding valuation worries, a discounted cash flow model suggests the shares at HK$153.8 are trading well above the estimated future cash flow value of HK$34.98. These concerns emerge after YOFC's strong performance, with the stock delivering a 167.25% return over the past 90 days, potentially prompting profit-taking among investors concerned about stretched valuations.