Does Summit Ascent Holdings Limited’s (HKG:102) Latest Financial Perfomance Look Strong?
After reading Summit Ascent Holdings Limited’s (SEHK:102) most recent earnings announcement (30 June 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. 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 Summit Ascent Holdings’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. Check out our latest analysis for Summit Ascent Holdings
Did 102’s recent earnings growth beat the long-term trend and the industry?
For the purpose of this commentary, 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 method allows me to examine many different companies on a more comparable basis, using the latest information. For Summit Ascent Holdings, its latest earnings is -HK$10.4M, which, in comparison to the previous year’s level, has become less negative. Since these values are relatively short-term thinking, I’ve estimated an annualized five-year value for 102’s net income, which stands at -HK$36.7M. This means that, while net income is negative, it has become less negative over the years.
Additionally, we can evaluate Summit Ascent Holdings’s loss by researching what’s going on in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over the past couple of years has increased by 35.80%, implying that Summit Ascent Holdings is in a high-growth phase with expenses shooting ahead of high top-line growth rates, leading to yearly losses. Viewing growth from a sector-level, the HK hospitality industry has been enduring some headwinds over the previous couple of years, leading to an average earnings drop of -8.14% in the most recent year. This shows that while Summit Ascent Holdings is presently unprofitable, any near-term headwind the industry is experiencing, Summit Ascent Holdings is relatively better-cushioned than its peers.
What does this mean?
Summit Ascent Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most valuable step is to assess company-specific issues Summit Ascent Holdings may be facing and whether management guidance has regularly been met in the past. You should continue to research Summit Ascent Holdings to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for 102’s future growth? Take a look at our free research report of analyst consensus for 102’s outlook.
2. Financial Health: Is 102’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.
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 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.
