Does KS Energy Limited’s (SGX:578) Past Performance Indicate A Stronger Future?
After looking at KS Energy Limited’s (SGX:578) latest earnings update (30 September 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. View our latest analysis for KS Energy
Were 578’s earnings stronger than its past performances and the industry?
I like to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to examine different companies in a uniform manner using the most relevant data points. For KS Energy, the most recent earnings -SGD50.5M, which, in comparison to the prior year’s level, has become less negative. Since these values may be relatively nearsighted, I’ve calculated an annualized five-year value for 578’s net income, which stands at -SGD69.0M. This means that, while net income is negative, it has become less negative over the years.
We can further evaluate KS Energy’s loss by researching what has been happening in the industry along with within the company. Firstly, I want to quickly look into the line items. Revenue growth over last few years has been negative at -33.29%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Inspecting growth from a sector-level, the SG trade distributors industry has been growing, albeit, at a unexciting single-digit rate of 8.95% in the prior year, . This is a change from a volatile drop of -4.31% in the last couple of years. This means that, though KS Energy is currently unprofitable, it may have only just been aided by the recent industry expansion, moving earnings towards to right direction.
What does this mean?
KS Energy’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to envisage what will happen in the future and when. The most valuable step is to examine company-specific issues KS Energy may be facing and whether management guidance has dependably been met in the past. You should continue to research KS Energy to get a more holistic view of the stock by looking at:
1. Financial Health: Is 578’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.
