XD Inc. (SEHK:2400) Share Option Grant Sparks Valuation Focus

Share option grant puts XD Inc. (SEHK:2400) incentive plan in focus XD Inc. (SEHK:2400) recently granted 151,021 share options to directors and full time employees, with a large portion going to chairman and CEO Huang Yimeng, immediately vesting under Hong Kong listing rules. The share option grant comes after a period of strong price momentum, with XD’s 30-day share price return of 39.05% and year to date share price return of 31.50%, alongside a very large 1 year total shareholder return of 264.45%. If this kind of move has your attention, it could be a good moment to widen your watchlist and check out as potential next ideas. With HK$86.00 per share, a value score of 1 and an estimated intrinsic value that implies roughly a 15% discount, the question for you is simple: is XD still mispriced or is the market already baking in future growth? Price-to-Earnings of 27.3x: Is it justified? XD shares last closed at HK$86.00, and the company is trading on a P/E of 27.3x, which screens as expensive compared with peers and fair value indicators that are available. The P/E ratio compares the current share price to earnings per share, so a higher multiple often reflects the market paying up for profits today or expectations about future earnings. For XD, the current multiple suggests investors are putting a premium on its earnings profile, even though our model indicates the shares are trading 14.8% below an estimated fair value of HK$100.91 based on a discounted cash flow approach. That premium looks even clearer when you line XD up against comparisons. The P/E of 27.3x is more than double the peer average of 11.5x and also well above the Hong Kong Entertainment industry average of 13.6x. It is also far ahead of the estimated fair P/E ratio of 15.3x. This is a level the market could move toward if expectations cool from here. Result: Price-to-Earnings of 27.3x (OVERVALUED) However, the rich 27.3x P/E and recent share price momentum could leave XD vulnerable if earnings growth, user engagement, or sentiment toward gaming platforms cools. Another view on value The SWS DCF model presents a different view compared with the rich 27.3x P/E. At HK$86.00, XD is trading around 14.8% below an estimated fair value of HK$100.91, which suggests that the market price is not fully reflecting that cash flow outlook. Which perspective do you think is closer to reality? Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day ( ). We show the entire calculation in full. You can track the result in your or and be alerted when this changes, or use our stock screener to discover . If you we even alert you when new companies match - so you never miss a potential opportunity. Build Your Own XD Narrative If you are not convinced by this view or simply prefer to test the numbers yourself, you can rework the assumptions and build your own take in just a few minutes. Start with . A great starting point for your XD research is our analysis highlighting that could impact your investment decision. Looking for more investment ideas? If XD has you thinking about what else might be out there, do not stop here. Use this momentum to refresh your watchlist with new angles. Spot potential value early by checking out that pair smaller share prices with stronger financial footing. Position yourself at the front of the AI wave by scanning that focus on artificial intelligence themes. Focus on price and fundamentals together by reviewing that appear cheap based on cash flows. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.