With A -15.80% Earnings Drop, Is Chinney Alliance Group Limited’s (HKG:385) A Concern?
After reading Chinney Alliance Group Limited’s (HKG:385) most recent earnings announcement (31 December 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Chinney Alliance Group’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Chinney Alliance Group
Was 385 weak performance lately part of a long-term decline?
385’s trailing twelve-month earnings (from 31 December 2017) of HK$176.77m has declined by -15.80% compared to the previous year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 28.50%, indicating the rate at which 385 is growing has slowed down. Why is this? Well, let’s take a look at what’s occurring with margins and whether the whole industry is experiencing the hit as well.
Over the last couple of years, revenue growth has fallen behind which indicates that Chinney Alliance Group’s bottom line has been driven by unmaintainable cost-cutting. Eyeballing growth from a sector-level, the HK construction industry has been
In terms of returns from investment, Chinney Alliance Group has not invested its equity funds well, leading to a 11.41% return on equity (ROE), below the sensible minimum of 20%.
What does this mean?
Chinney Alliance Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. I recommend you continue to research Chinney Alliance Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 385’s future growth? Take a look at our free research report of analyst consensus for 385’s outlook.
Financial Health: Is 385’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
