In this commentary, I will examine Jiashili Group Limited's (SEHK:1285) latest earnings update (30 June 2019) and compare these figures against its performance over the past couple of years, as well as how the rest of the food industry performed. As an investor, I find it beneficial to assess 1285’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
How Well Did 1285 Perform?
1285's trailing twelve-month earnings (from 30 June 2019) of CN¥125m has jumped 15% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 7.5%, indicating the rate at which 1285 is growing has accelerated. What's the driver of this growth? Let's see whether it is only owing to industry tailwinds, or if Jiashili Group has experienced some company-specific growth.
In terms of returns from investment, Jiashili Group has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 7.3% exceeds the HK Food industry of 5.8%, indicating Jiashili Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Jiashili Group’s debt level, has declined over the past 3 years from 19% to 17%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Jiashili Group has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Jiashili Group to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 1285’s future growth? Take a look at our free research report of analyst consensus for 1285’s outlook.
- Financial Health: Are 1285’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 30 June 2019. This may not be consistent with full year annual report figures.
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