Fundamentals of Stock Valuation: A Comprehensive Analysis of Five Key Metrics—including P/E Ratio and P/B Ratio

3. Layman’s explanation: Net assets represent how much the company would be worth if liquidated. A P/B ratio of 1 means you’re paying ¥1 for ¥1 worth of net assets; a ratio below 1 means you’re buying net assets at a discount. 4. How to use it: ・Below 1: potentially undervalued—commonly termed “trading below book value” ・Between 1 and 3: normal range ・Above 3–5: possibly overvalued, or typical for light-asset companies ・Best suited for capital-intensive industries, such as banking, steel, and real estate Three: Price-to-Sales Ratio (P/S Ratio) 1. Definition: The ratio of share price to revenue per share—assessing whether the company can truly generate profits. 2. Formula: P/S Ratio = Share Price ÷ Revenue Per Share 3. Layman’s explanation: Regardless of profitability, this metric first examines how much the company sells. Even unprofitable firms may have turnaround potential if they generate revenue. 4. How to use it: ・The lower the ratio, the lower the market’s valuation per unit of revenue ・Especially suitable for pre-profitability but high-revenue-growth companies—e.g., early-stage e-commerce or tech stocks ・More meaningful when comparing peers within the same industry, as cross-industry variations are substantial Four: Dividend Yield 1. Definition: The ratio of annual cash dividend per share to the current share price. 2. Formula: Dividend Yield = (Dividend Per Share ÷ Share Price) × 100% 3. Layman’s explanation: Just as bank deposits earn interest, stocks yield dividends. A higher dividend yield implies richer cash returns. 4. How to use it: ・Above 3% is considered decent; above 5% is relatively high ・High dividend yields often signal strong cash flow and management’s willingness to share profits ・Caution: A sharply rising dividend yield may result from a collapsing stock price—not necessarily positive; risk assessment is essential Five: PEG Ratio 1. Definition: A metric combining the P/E ratio with the company’s earnings growth rate. 2. Formula: PEG = P/E Ratio ÷ Earnings Growth Rate (typically using the projected 3–5 year compound annual growth rate) 3. Layman’s explanation: Evaluates whether the P/E ratio keeps pace with the company’s growth speed. 4. How to use it: ・PEG = 1: valuation is reasonable ・PEG 1: potentially overvalued—or reflects excessively high market expectations ・Best suited for growth-oriented companies, such as those in technology or new energy sectors Three Key Reminders When Using These Metrics 1. No single metric is universally perfect—each has inherent limitations. Banking stocks suit P/B analysis; tech/growth stocks align better with PEG; consumer stocks are often assessed via P/E.

A Global Semiconductor Champion Emerges from Suzhou—Its IPO Values the Company at ¥26 Billion

Shipment volume exceeds 1 billion units. The final semiconductor IPO of 2024 went to a Suzhou-based enterprise. According to a report by ChipInsights on December 31, InnoSemicon (InnoSemi), a gallium nitride (GaN) leader, listed on the Main Board of the Hong Kong Stock Exchange on December 30—becoming the first “third-generation semiconductor” company listed in Hong Kong! InnoSemicon’s final offer price was HK$30.86 per share. On its first trading day, it closed at HK$31.00 per share; today, it rose another 1.29%, bringing its total market capitalization to HK$27.6 billion (approximately RMB ¥26 billion). Major smartphone manufacturers—including OPPO, vivo, Xiaomi, and Lenovo—as well as e-commerce brands like Anker and Ugreen, new-energy vehicle suppliers such as RoboSense and Hesai, and leading enterprises across home appliances and energy storage sectors, are all InnoSemicon partners. Zeng Yujun, founder and chairman of CATL, also participated in InnoSemicon’s Series C financing as a personal investor. At the bell-ringing ceremony, Dr. Luò Wēiwēi, Chairman of InnoSemicon, stated: “InnoSemicon is a global leader in the power semiconductor revolution—and the world’s largest GaN chip manufacturer.” InnoSemicon operates the world’s largest GaN power semiconductor production base, with a monthly wafer capacity of 12,500 wafers. Its product portfolio covers GaN wafers, discrete GaN devices, integrated chips, and modules. It is not only the world’s first company to achieve mass production of 8-inch silicon-based GaN wafers, but also the sole global firm capable of delivering full-voltage-range silicon-based GaN semiconductor products at industrial scale. In 2023, based on converted GaN discrete device shipment volume, InnoSemicon ranked first globally among GaN power semiconductor companies, commanding a 42.4% market share. As of Q3 2024, its cumulative GaN shipments surpassed 1 billion units. The company plans to allocate the net proceeds from its global offering toward expanding its 8-inch GaN wafer production capacity—from the current level to 70,000 wafers per month over the next five years—as well as R&D, product portfolio expansion, global distribution network enhancement, working capital, and other general corporate purposes. 01. A Former NASA Chief Scientist Returns to China to Found a Global Semiconductor Champion In 2017, Dr. Luò Wēiwēi—formerly NASA’s Chief Scientist—founded InnoSemicon. Dr. Luò earned her degree in applied mathematics from Massey University in New Zealand, then spent 15 years at NASA in the United States. In 2015, she founded two advanced-materials startups; InnoSemicon marks her third entrepreneurial venture. ▲ Dr. Luò Wēiwēi delivering remarks at InnoSemicon’s bell-ringing ceremony (Source: InnoSemicon) As Founder, Chairman, and Executive Director, Dr. Luò leads InnoSemicon’s executive team alongside CEO Wu Jīngāng. Both possess extensive experience in advanced materials and semiconductor technologies. Wu Jīngāng served at Semiconductor Manufacturing International Corporation (SMIC) from 2001 until July 2021, most recently as Vice President of R&D. Gallium nitride power semiconductors have progressed through infancy, development, and commercialization phases—and since 2023 have entered a period of prosperity. Founded at the precise moment GaN technology began penetrating consumer markets, InnoSemicon timely established an 8-inch silicon-based GaN wafer production line.

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