How Has China Tianrui Group Cement Company Limited’s (HKG:1252) Performed Against The Industry?
When China Tianrui Group Cement Company Limited (HKG:1252) announced its most recent earnings (31 December 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well China Tianrui Group Cement has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see 1252 has performed.
See our latest analysis for China Tianrui Group Cement
How Well Did 1252 Perform?
1252’s trailing twelve-month earnings (from 31 December 2017) of CN¥1.00b has more than doubled from CN¥295.81m in the prior year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -14.75%, indicating the rate at which 1252 is growing has accelerated. What’s the driver of this growth? Let’s take a look at whether it is merely attributable to an industry uplift, or if China Tianrui Group Cement has experienced some company-specific growth.
Though both top-line and bottom-line growth rates in the past few years were on average negative, earnings were more so. While this resulted in a margin contraction, it has cushioned China Tianrui Group Cement’s earnings contraction. Looking at growth from a sector-level, the HK basic materials industry has been multiplying growth, more than doubling average earnings in the previous year, . This is a a substantial turnaround from a volatile drop of -5.63% in the last couple of years. This growth is a median of profitable companies of 10 Basic Materials companies in HK including China Yu Tian Holdings, BBMG and Luks Group (Vietnam Holdings). This suggests that, in the recent industry expansion, China Tianrui Group Cement is able to amplify this to its advantage.
In terms of returns from investment, China Tianrui Group Cement has fallen short of achieving a 20% return on equity (ROE), recording 9.99% instead. However, its return on assets (ROA) of 7.55% exceeds the HK Basic Materials industry of 5.73%, indicating China Tianrui Group Cement has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for China Tianrui Group Cement’s debt level, has increased over the past 3 years from 6.37% to 9.74%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 123.20% to 119.75% over the past 5 years.
What does this mean?
Though China Tianrui Group Cement’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research China Tianrui Group Cement to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 1252’s future growth? Take a look at our free research report of analyst consensus for 1252’s outlook.
Financial Health: Are 1252’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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
