Ningbo Construction Co Ltd Class A Estimates SSE601789

Ningbo Construction Co., Ltd. (SSE: 601789) is a Chinese construction and engineering company listed on the Shanghai Stock Exchange. Its Class A shares are estimated to have a price-to-earnings (P/E) ratio of approximately 12.5 and a price-to-book (P/B) ratio of about 1.1, based on recent financial data and market consensus. These estimates are derived from the company’s latest annual earnings and current share price, but actual figures may vary with market conditions and reporting updates.

Formula

The price-to-earnings (P/E) ratio is calculated by dividing the current market price per share by the earnings per share (EPS). The formula is:

P/E = Price per share / Earnings per share

Similarly, the price-to-book (P/B) ratio is the market price per share divided by the book value per share (BVPS):

P/B = Price per share / Book value per share

Where:

• Price per share (t) is the current trading price of one Class A share in CNY.
• Earnings per share (e) is the company’s net income divided by the number of outstanding shares, in CNY.
• Book value per share (b) is total shareholders’ equity divided by the number of outstanding shares, in CNY.

Worked Example

Using the default values from the calculator:

• Current share price = 5.20 CNY
• EPS = 0.42 CNY
• Book value per share = 4.73 CNY

Compute the P/E ratio:

P/E = 5.20 / 0.42 = 12.38, rounded to 12.38 (the calculator shows 12.38).

Compute the P/B ratio:

P/B = 5.20 / 4.73 = 1.10, rounded to 1.10.

These estimates suggest the stock trades at roughly 12.4 times earnings and 1.1 times book value, which are typical for a mid-cap construction firm in China.

Background on Ningbo Construction Co., Ltd.

Ningbo Construction Co., Ltd. is a state-owned enterprise based in Ningbo, Zhejiang Province. It engages in general construction contracting, including residential, commercial, and infrastructure projects. The company also provides engineering design, decoration, and property development services. Listed on the Shanghai Stock Exchange under the ticker 601789, its Class A shares are traded in CNY and are subject to Chinese securities regulations.

The company’s financial performance is closely tied to the domestic construction sector, which is influenced by government infrastructure spending, real estate demand, and regional economic growth. As of the latest annual report, the company reported steady revenue but modest profit margins, typical of the industry.

How to Use the Estimates

These estimates are useful for investors who want a quick valuation snapshot. The P/E ratio helps compare the company’s earnings multiple with peers or historical averages. A lower P/E may indicate undervaluation, while a higher P/E suggests growth expectations. The P/B ratio is relevant for asset-heavy firms like construction companies, as it reflects how much investors pay for each yuan of net assets.

To use the calculator, input the current share price, EPS, and book value per share. These figures are available from the company’s quarterly or annual reports, or from financial data providers. The results give you the estimated multiples, which you can then compare with industry benchmarks or past values.

Common Mistakes and Misconceptions

A frequent mistake is using diluted EPS instead of basic EPS. Diluted EPS accounts for potential share conversions, which can lower the value and inflate the P/E. Always use the same EPS basis for consistency. Another error is mixing fiscal year data with trailing twelve months (TTM). If the company’s fiscal year ends in December, use the most recent annual EPS, or compute a TTM figure from quarterly reports.

Also, the P/B ratio can be misleading if the book value includes intangible assets or goodwill. For construction firms, book value is mostly tangible assets, but be aware of any revaluation adjustments. Finally, these ratios are backward-looking; they do not predict future earnings. Use them alongside other metrics like revenue growth, order backlog, and debt levels.

How to Choose the Right Valuation Metric

For a construction company, the P/E ratio is often preferred when earnings are stable and positive. However, during cyclical downturns, earnings may be depressed, making the P/E appear artificially high. In such cases, the P/B ratio might be more reliable, as book value is less volatile. Alternatively, the enterprise value-to-EBITDA (EV/EBITDA) ratio is a popular alternative, as it normalizes for capital structure and depreciation.

Investors should also consider the price-to-sales (P/S) ratio if the company has thin margins. For Ningbo Construction, which operates on low margins typical of the industry, a combination of P/E and P/B gives a balanced view. Always compare these ratios with those of similar-sized construction firms in China, such as other regional state-owned contractors.

Limitations of the Estimates

These estimates rely on historical financial data and current market prices. They do not account for future earnings changes, macroeconomic shifts, or company-specific risks. For instance, if the company wins a large infrastructure contract, earnings could rise, lowering the P/E. Conversely, a slowdown in property development could hurt earnings, raising the P/E.

Also, the share price is volatile and can change intraday. The estimates are a snapshot, not a forecast. Always check the latest financial statements and news before making investment decisions. Consult a financial advisor for personalized guidance, as this content is for informational purposes only and does not constitute investment advice.

Frequently Asked Questions

What does “Class A shares” mean for this stock?

Class A shares are ordinary shares issued by Chinese companies on the Shanghai or Shenzhen exchanges, traded in CNY. They are available to domestic investors and, under certain programs, to qualified foreign investors. For Ningbo Construction, Class A shares are the only listed share class, so the ticker 601789 refers to these shares.

Where can I find the latest EPS and book value for 601789?

You can find these figures in the company’s quarterly and annual reports, published on the Shanghai Stock Exchange website or the company’s investor relations page. Financial data platforms like Bloomberg, Wind, or Yahoo Finance also provide this data, though they may have slight delays.

Why is the P/E ratio different from what I see on my trading app?

Trading apps often use trailing twelve months (TTM) EPS or forward EPS, which can differ from the annual EPS used here. Also, some apps use diluted EPS or adjust for non-recurring items. Always check the methodology behind the ratio to ensure consistency.

Is a P/E of 12.5 considered cheap for a construction company?

In the Chinese construction sector, P/E ratios typically range from 8 to 15. A ratio of 12.5 is within the normal range, suggesting the stock is fairly valued relative to peers. However, compare it with the company’s historical average and growth prospects to make a fuller judgment.

Can I use these estimates to predict the stock price?

No, these estimates are descriptive, not predictive. They tell you what the market is currently paying relative to earnings and book value. Future prices depend on earnings growth, market sentiment, and broader economic conditions. Use them as a starting point for deeper analysis.

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in t | Current share price (CNY) | CNY | 5.20 | 0 | 1000
in e | Earnings per share (EPS, CNY) | CNY | 0.42 | 0 | 100
in b | Book value per share (CNY) | CNY | 4.73 | 0 | 1000
out pe | Estimated P/E ratio | - | t / e | 2
out pb | Estimated P/B ratio | - | t / b | 2