Tungray Technologies (TRSG): A Mispriced Opportunity or a Cautionary Tale?

The stock of Tungray Technologies Inc. (NASDAQ:TRSG) has plummeted by 35% year-to-date, dragging its market cap to $23.4 million as of November 2025. This sharp decline has pushed the company's price-to-sales (P/S) ratio to 1.83, calculated using its 2024 annual revenue of $12.81 million. By comparison, the automotive refrigeration industry's average P/S ratio for parts and equipment stands at 0.5329 according to industry analysis. At first glance, TRSG appears grossly overvalued. But is this a case of market pessimism outpacing fundamentals, or does the math tell a different story?

Let's dissect the numbers. Tungray's revenue has declined by 10.8% year-over-year in 2024, following a three-year slide that began with $16 million in 2022. This erosion has left investors questioning the company's ability to compete in a sector projected to grow at a 7% CAGR through 2033. Yet, the first half of 2025 tells a different tale: revenue surged 37% to $7.4 million, driven by a 130.6% spike in standardized product sales tied to new energy vehicle refrigeration demand. This rebound, coupled with a 48.6% gross margin (up from 46.7% in 2024), suggests Tungray may be regaining its footing.

The key question is whether this revival is sustainable. The automotive refrigeration market is indeed expanding, fueled by e-commerce logistics and stricter food safety regulations. However, Tungray's EBITDA remains negative at -$0.27 million for the trailing twelve months according to financial reports, and its 2024 revenue decline of 10.8% indicates structural challenges. While the company returned to profitability in H1 2025, this was against a $0.8 million net loss in the same period last year-a low bar for comparison as reported in earnings.

Here's where the valuation debate splits. On one hand, TRSG's P/S ratio of 1.83 is nearly triple the industry average for parts manufacturers according to industry benchmarks, implying the market is pricing in aggressive growth that may not materialize. On the other hand, the company's H1 2025 performance hints at a potential inflection point. If Tungray can replicate its first-half momentum for the full year, 2025 revenue could reach $14.8 million-a 15% increase from 2024. At that level, the P/S ratio would drop to 1.58, still high but more in line with peers during periods of rapid growth.

The risk, however, is that the market is already discounting the worst. With a market cap of $23.4 million, TRSG trades at just 1.8 times its 2024 revenue. If the company fails to sustain its H1 growth or if the automotive refrigeration sector underperforms, this valuation could prove optimistic. Conversely, if Tungray's gross margin improvements and product diversification into new energy vehicles translate into consistent profitability, the stock might be a bargain.

In conclusion, TRSG's valuation is a double-edged sword. The P/S ratio suggests overvaluation, but the recent revenue rebound and industry tailwinds offer a path to re-rating. Long-term investors must weigh the company's operational turnaround against the risk of a prolonged slump. For now, the stock remains a high-conviction call, best suited for those who can stomach volatility in pursuit of a potential rebound.