Was China Conch Venture Holdings Limited’s (HKG:586) Earnings Growth Better Than The Industry’s?
Investors with a long-term horizong may find it valuable to assess China Conch Venture Holdings Limited’s (SEHK:586) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how China Conch Venture Holdings is currently performing. Check out our latest analysis for China Conch Venture Holdings
Were 586’s earnings stronger than its past performances and the industry?
For the purpose of this commentary, I like to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to analyze many different companies in a uniform manner using the most relevant data points. For China Conch Venture Holdings, its latest earnings (trailing twelve month) is CN¥2.60B, which compared to the previous year’s figure, has moved up by a substantial 58.06%. Given that these values may be fairly short-term thinking, I have determined an annualized five-year value for China Conch Venture Holdings’s net income, which stands at CN¥1.96B This shows that, on average, China Conch Venture Holdings has been able to steadily grow its net income over the past few years as well.
What’s the driver of this growth? Well, let’s take a look at whether it is merely due to an industry uplift, or if China Conch Venture Holdings has seen some company-specific growth. The climb in earnings seems to be driven by a substantial top-line increase outpacing its growth rate of costs. Though this has caused a margin contraction, it has made China Conch Venture Holdings more profitable. Scanning growth from a sector-level, the HK machinery industry has been growing its average earnings by double-digit 22.75% over the prior twelve months, . This is a turnaround from a volatile drop of -11.16% in the last couple of years. This suggests that, in the recent industry expansion, China Conch Venture Holdings is able to amplify this to its advantage.
What does this mean?
China Conch Venture Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research China Conch Venture Holdings to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for 586’s future growth? Take a look at our free research report of analyst consensus for 586’s outlook.
2. Financial Health: Is 586’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.
3. 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 30 June 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.
