Examining Hong Leong Asia Ltd.'s (SGX:H22) 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 H22's latest performance announced on 31 December 2019 and weight these figures against its longer term trend and industry movements.
How Well Did H22 Perform?
H22 recently turned a profit of S$34m (most recent trailing twelve-months) compared to its average loss of -S$789.1k over the past five years.
In terms of returns from investment, Hong Leong Asia has fallen short of achieving a 20% return on equity (ROE), recording 6.5% instead. Furthermore, its return on assets (ROA) of 1.4% is below the SG Machinery industry of 4.7%, indicating Hong Leong Asia's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Hong Leong Asia’s debt level, has increased over the past 3 years from 4.0% to 5.7%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 41% to 34% over the past 5 years.
What does this mean?
Though Hong Leong Asia's past data is helpful, it is only one aspect of my investment thesis. While Hong Leong Asia has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I suggest you continue to research Hong Leong Asia to get a better picture of the stock by looking at:
- Financial Health: Are H22’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.
- Valuation: What is H22 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 H22 is currently mispriced by the market.
- 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 31 December 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 email@example.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.