U.S. Markets closed

Imagine Owning International Business Settlement Holdings (HKG:147) And Trying To Stomach The 90% Share Price Drop

Simply Wall St

As every investor would know, not every swing hits the sweet spot. But you want to avoid the really big losses like the plague. So take a moment to sympathize with the long term shareholders of International Business Settlement Holdings Limited (HKG:147), who have seen the share price tank a massive 90% over a three year period. That would certainly shake our confidence in the decision to own the stock. Furthermore, it's down 15% in about a quarter. That's not much fun for holders.

We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

Check out our latest analysis for International Business Settlement Holdings

Because International Business Settlement Holdings made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last three years, International Business Settlement Holdings saw its revenue grow by 24% per year, compound. That is faster than most pre-profit companies. So on the face of it we're really surprised to see the share price down 53% a year in the same time period. You'd want to take a close look at the balance sheet, as well as the losses. Ultimately, revenue growth doesn't amount to much if the business can't scale well. Unless the balance sheet is strong, the company might have to raise capital.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

SEHK:147 Income Statement, January 11th 2020

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on International Business Settlement Holdings's earnings, revenue and cash flow.

A Different Perspective

International Business Settlement Holdings shareholders gained a total return of 6.7% during the year. Unfortunately this falls short of the market return. But at least that's still a gain! Over five years the TSR has been a reduction of 15% per year, over five years. So this might be a sign the business has turned its fortunes around. You could get a better understanding of International Business Settlement Holdings's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

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.