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Does Road King Infrastructure Limited's (HKG:1098) Past Performance Indicate A Stronger Future?

Simply Wall St

Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Road King Infrastructure Limited's (SEHK:1098) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.

Check out our latest analysis for Road King Infrastructure

How Well Did 1098 Perform?

1098's trailing twelve-month earnings (from 30 June 2019) of HK$3.0b has jumped 24% compared to the previous year.

However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 30%, indicating the rate at which 1098 is growing has slowed down. Why could this be happening? Well, let's look at what's occurring with margins and if the entire industry is feeling the heat.

SEHK:1098 Income Statement, November 28th 2019

In terms of returns from investment, Road King Infrastructure has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 3.9% exceeds the HK Real Estate industry of 2.8%, indicating Road King Infrastructure has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Road King Infrastructure’s debt level, has increased over the past 3 years from 9.2% to 21%.

What does this mean?

Though Road King Infrastructure'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? I suggest you continue to research Road King Infrastructure to get a better picture of the stock by looking at:

  1. Financial Health: Are 1098’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. Valuation: What is 1098 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 1098 is currently mispriced by the market.
  3. 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.