Should You Be Content With Global Mastermind Capital Limited’s (HKG:905) Earnings Growth?
After looking at Global Mastermind Capital Limited’s (SEHK:905) latest earnings announcement (30 June 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. 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 Global Mastermind Capital’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for Global Mastermind Capital
Could 905 beat the long-term trend and outperform its industry?
To account for any quarterly or half-yearly updates, I use the ‘latest twelve-month’ data, 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 allows me to assess different companies on a similar basis, using the latest information. For Global Mastermind Capital, its most recent earnings is -HK$36.0M, which compared to the prior year’s level, has become less negative. Given that these values may be somewhat myopic, I have created an annualized five-year figure for Global Mastermind Capital’s earnings, which stands at -HK$37.4M. This means even though net income is negative, it has become less negative over the years.
We can further assess Global Mastermind Capital’s loss by researching what has been happening in the industry as well as within the company. Firstly, I want to briefly look into the line items. Revenue growth over the past couple of years has grown by 38.77%, indicating that Global Mastermind Capital is in a high-growth period with expenses shooting ahead of high top-line growth rates, leading to yearly losses. Inspecting growth from a sector-level, the HK capital markets industry has been relatively flat in terms of earnings growth over the prior twelve months, settling down from a solid 14.23% over the previous five years. This suggests that though Global Mastermind Capital is currently loss-making, any recent headwind the industry is enduring, Global Mastermind Capital is less exposed compared to its peers.
What does this mean?
Though Global Mastermind Capital’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most valuable step is to assess company-specific issues Global Mastermind Capital may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Global Mastermind Capital to get a more holistic view of the stock by looking at:
1. Financial Health: Is 905’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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. 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.
