A Look At Shandong Hi-Speed Holdings Group’s Valuation After Its 2025 Profit Warning

Profit warning shifts focus to earnings guidance details

Shandong Hi-Speed Holdings Group (SEHK:412) has issued earnings guidance for 2025, telling investors it expects unaudited net profit of at least CN¥140 million, compared with audited net profit of about CN¥693 million in 2024.

The Board attributes the projected profit drop mainly to realised losses on disposal of debt instruments, lower interest income from financial assets, and higher income tax expenses, partly offset by higher fair value gains on certain financial assets.

See our latest analysis for Shandong Hi-Speed Holdings Group.

The profit warning lands after a volatile spell for shareholders, with the latest HK$1.47 share price sitting alongside a 90 day share price return of 3.52% but a 1 year total shareholder return decline of 74.70%, suggesting momentum has been weak despite the recent move.

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With earnings guidance pointing to a much smaller profit in 2025 and the share price already under pressure, the key question is whether Shandong Hi-Speed is now trading below its fundamentals or if the market is already pricing in future growth.

Preferred P/E of 16.7x, is it justified?

On a P/E of 16.7x at a last close of HK$1.47, Shandong Hi-Speed trades at a richer earnings multiple than both its renewable energy industry and direct peer averages, suggesting the market is putting a relatively full price on its current profits.

The P/E ratio compares the share price to earnings per share and is often used to see how much investors are willing to pay for current earnings. For a business with exposure to renewable power assets and investment activities, it can hint at how confident the market is in the durability and quality of those earnings.

Here, the market is assigning a 16.7x P/E to Shandong Hi-Speed, compared with 16.3x for the broader Asian renewable energy industry and 9.1x for its peer group on average. That gap to peers suggests investors are paying a premium for its earnings profile despite flags like large one off gains and interest expenses that are not well covered by earnings, so some may question whether this higher multiple is fully supported by the underlying fundamentals.

Relative to the industry, the company is only slightly above the Asian renewable energy P/E, but it sits well ahead of the peer average, which is a stronger signal that the shares are priced more richly than many comparable names. If the market were to reassess those earnings or treat one off items as less repeatable, that premium could be an area to watch.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-earnings of 16.7x (OVERVALUED).

However, you still need to weigh the clear 1 year total shareholder return decline of 74.70% and the projected 2025 profit drop against that richer P/E multiple.

Find out about the key risks to this Shandong Hi-Speed Holdings Group narrative.

Another view using our DCF model

While the 16.7x P/E makes Shandong Hi-Speed look expensive against peers, the SWS DCF model also points to a full price, with the shares at HK$1.47 versus an estimated future cash flow value of HK$1.20. If both earnings and cash flow signals indicate a rich valuation, where is the margin of safety?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Shandong Hi-Speed Holdings Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 246 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With sentiment clearly mixed, the key question is how you interpret the balance between concerns and potential upside. To stress test your own view, it is worth checking the detailed breakdown of the 1 key reward and 3 important warning signs via 1 key reward and 3 important warning signs

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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.

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