Investors punished Xiamen Yan Palace Bird’s Nest Industry ahead of the weekend, with the stock down over the past month, even as the latest half year numbers told a more resilient story. The share price closed at HK$5.45 on 14 August, and trailing earnings support a P/E of 9.8x that sits below both peers and the wider Hong Kong food sector.

The headline from this earnings release is margins. Net profit margin for the trailing 12 months sits at 10.2%, above last year’s 8.7%, and half year basic earnings per share of ¥0.24 point to a business still converting bird’s nest demand into solid profitability.

Is Xiamen Yan Palace Bird’s Nest Industry trading at a genuine discount, or is the low P/E simply pricing in the projected 6.7% annual…