Does Vestate Group Holdings Limited’s (HKG:1386) -19.7% Earnings Decline Reflect A Long-Term Trend?
Examining Vestate Group Holdings Limited’s (SEHK:1386) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess 1386’s latest performance announced on 30 September 2017 and weight these figures against its longer term trend and industry movements. View our latest analysis for Vestate Group Holdings
Was 1386’s weak performance lately a part of a long-term decline?
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This allows me to examine various companies on a similar basis, using the most relevant data points. For Vestate Group Holdings, its latest earnings is -HK$247.8M, which, in comparison to the previous year’s figure, has become more negative. Since these values are relatively nearsighted, I have determined an annualized five-year value for Vestate Group Holdings’s earnings, which stands at -HK$113.5M. This doesn’t look much better, as earnings seem to have gradually been getting more and more negative over time.
Additionally, we can assess Vestate Group Holdings’s loss by looking at what has been happening in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over the last couple of years has been negative at -12.48%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Eyeballing growth from a sector-level, the HK luxury industry has been growing its average earnings by double-digit 43.31% in the past twelve months, . This is a turnaround from a volatile drop of -19.66% in the last few years. This suggests that whatever tailwind the industry is benefiting from, Vestate Group Holdings has not been able to gain as much as its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will happen in the future and when. The most useful step is to examine company-specific issues Vestate Group Holdings may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research Vestate Group Holdings to get a more holistic view of the stock by looking at:
1. Financial Health: Is 1386’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.
