The market leader with a 57% discount—a discount the market is offering out of fear

At first glance, this stock seems inexplicably cheap. It’s a dominant player in a huge and growing market, with 17% revenue growth, a return on equity over 20%, a mountain of cash, and a price-to-earnings ratio of around 6 to 7. On top of that, some models project hundreds of percent growth. If you were to go by these numbers alone, you’d buy right away. But this is precisely where the first trap lies, which we’ll examine in this article: that low price-to-earnings ratio is inflated by one-time gains from investments, and the actual operating valuation is roughly double that. It’s still cheap, but not as extremely so as the screener suggests.

The second layer of the story is geographic and political. This company is Chinese, and being a Chinese stock traded in New York today means carrying a risk premium that neither American nor European companies face: the threat of delisting, opaque regulation, geopolitical tensions, and currency risk. On top of that, a specific blow came in January…