Should You Be Content With China Wah Yan Healthcare Limited’s (HKG:648) Earnings Growth?
Analyzing China Wah Yan Healthcare Limited’s (SEHK:648) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess 648’s recent performance announced on 30 June 2017 and compare these figures to its long-term trend and industry movements. View our latest analysis for China Wah Yan Healthcare
Did 648 beat its long-term earnings growth trend and its industry?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to assess many different companies in a uniform manner using the latest information. For China Wah Yan Healthcare, its most recent earnings (trailing twelve month) is -HK$267.60M, which compared to last year’s figure, has become less negative. Given that these values may be fairly short-term, I’ve determined an annualized five-year figure for China Wah Yan Healthcare’s earnings, which stands at -HK$215.52M. This means that, China Wah Yan Healthcare has historically performed better than recently, though it seems like earnings are now heading back towards to right direction again.
We can further evaluate China Wah Yan Healthcare’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years China Wah Yan Healthcare’s top-line has grown by a mere 2.74%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Looking at growth from a sector-level, the HK healthcare industry has been growing, albeit, at a muted single-digit rate of 4.50% in the previous twelve months, and 4.49% over the previous five years. This suggests that even though China Wah Yan Healthcare is presently loss-making, whatever near-term headwind the industry is facing, the impact on China Wah Yan Healthcare has been softer relative to its peers.
What does this mean?
Though China Wah Yan Healthcare’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always hard to predict what will happen in the future and when. The most insightful step is to examine company-specific issues China Wah Yan Healthcare may be facing and whether management guidance has regularly been met in the past. You should continue to research China Wah Yan Healthcare to get a more holistic view of the stock by looking at:
1. Financial Health: Is 648’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.
2. 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.
