Recently, the trend driven by DeepSeek Technology has pushed the Hong Kong stocks to rise dramatically, with more and more investors paying attention to the surge of Chinese assets. As this week marks the start of the Chinese concept company's earnings season, $阿里巴巴 (BABA.US)$ $Baidu(BIDU.US)$ $Bilibili(BILI.US)$ companies like these will successively release their performance reports. How can opportunities for technology stock valuation be identified from earnings data? Is there still room for Chinese technology stocks now? Let's learn some simple valuation methods and prepare in advance!

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For fundamental investment, it's important to evaluate the company before buying stocks. Buying stocks when undervalued increases the chances of making a profit; conversely, buying when overvalued may just mean becoming a bag holder. Combining Earnings Reports data, how can stocks be valued? There are many methods, and we will list the four most commonly used valuation methods here.

1. PE (Price-to-Earnings Ratio)

The PE ratio is an indicator that measures a company's stock price relative to its EPS. The simplest calculation method is to divide the total Market Cap by the net profit.

The PE ratio is usually used to assess the valuation of stable profit companies. For most companies with an earnings growth rate of less than 10%, a PE ratio under 20 times is considered reasonable. At the same time, industry comparisons should be noted; a PE ratio below the industry average is relatively reasonable, although leading companies in the industry may be allowed a certain premium.

2. Price to Book Ratio (PB)

The Price to Book Ratio is an indicator that measures a company's stock price relative to its book value per share. The simplest calculation method is to divide the total Market Cap by net Assets.

The Price to Book Ratio is often used to measure the valuation of cyclical stocks. For most companies in cyclical Industries, it is reasonable for the Price to Book Ratio to be below 1, while some companies may have problematic Assets that require an even lower Price to Book Ratio.

3. Price to Sales Ratio (PS)

The Price to Sales Ratio is an indicator that measures stock price relative to its revenue per share. The simplest calculation method is to divide the total Market Cap by total revenue.

The Price to Sales Ratio is usually used for the valuation of companies that are operating at a loss or have a low profit base, and are experiencing rapid revenue growth. When assessing the Price to Sales Ratio, special attention should be paid to peer comparisons, as the Price to Sales Ratios can vary greatly across different Industries.

4. PEG Ratio (PE to Growth)

The PEG Ratio combines the Price to Earnings Ratio and earnings growth rate to assess valuation. The calculation method is Price to Earnings Ratio / (expected net profit growth rate * 100). The PEG Ratio is typically used for the valuation of high-growth companies, which often have high Price to Earnings valuations. However, as net profit grows, the Price to Earnings Ratio may decrease in the future. If a stock's PEG is below 1, the valuation may be low.

For more information about Company Valuation, you can refer to the course:If you want to invest, learning to value is fundamental.