The company's significant liabilities and EBIT loss over the last year make the stock quite risky. Its future earnings will determine the ability to maintain a healthy balance sheet. With low liquid assets and a loss of CN¥2.7b in the last year, it's a risky investment.
Investors appear to be accepting of China Grand Automotive Services Group Ltd.'s low P/S ratio given the forecast of sliding revenue. Without significant changes, it's difficult to envision a significant increase in the stock's price.
Facing liquidity issues and recent poor performance leading to revenue decline and EBIT loss, the company is a high-risk entity. A potential risk for investors as major re-capitalization might be needed if creditors demand repayment.
Poor performance of China Grand Automotive stock might be due to a consistent decline in earnings per share. In a downmarket, however, such negativity could imply overselling, hinting at a potential rebound if solid growth indicators emerge.
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