When close to half the companies operating in the Packaging industry in Singapore have price-to-sales ratios (or "P/S") above 0.8x, you may consider Southern Packaging Group Limited (SGX:BQP) as an attractive investment with its 0.2x P/S ratio. Although, it's not wise to just take the P/S at face value as there may be an explanation why it's limited.

Check out our latest analysis for Southern Packaging Group

SGX:BQP Price to Sales Ratio vs Industry January 22nd 2025

What Does Southern Packaging Group's P/S Mean For Shareholders?

Southern Packaging Group has been doing a good job lately as it's been growing revenue at a solid pace. It might be that many expect the respectable revenue performance to degrade substantially, which has repressed the P/S. If that doesn't eventuate, then existing shareholders have reason to be optimistic about the future direction of the share price.

Want the full picture on earnings, revenue and cash flow for the company? Then our free report on Southern Packaging Group will help you shine a light on its historical performance.

Is There Any Revenue Growth Forecasted For Southern Packaging Group?

In order to justify its P/S ratio, Southern Packaging Group would need to produce sluggish growth that's trailing the industry.

Retrospectively, the last year delivered a decent 11% gain to the company's revenues. The latest three year period has also seen a 7.5% overall rise in revenue, aided somewhat by its short-term performance. Therefore, it's fair to say the revenue growth recently has been respectable for the company.

This is in contrast to the rest of the industry, which is expected to grow by 31% over the next year, materially higher than the company's recent medium-term annualised growth rates.

In light of this, it's understandable that Southern Packaging Group's P/S sits below the majority of other companies. It seems most investors are expecting to see the recent limited growth rates continue into the future and are only willing to pay a reduced amount for the stock.

The Key Takeaway

While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.

As we suspected, our examination of Southern Packaging Group revealed its three-year revenue trends are contributing to its low P/S, given they look worse than current industry expectations. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. If recent medium-term revenue trends continue, it's hard to see the share price experience a reversal of fortunes anytime soon.

There are also other vital risk factors to consider and we've discovered 4 warning signs for Southern Packaging Group (3 shouldn't be ignored!) that you should be aware of before investing here.

If you're unsure about the strength of Southern Packaging Group's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.