Introducing Chuan Holdings, The Stock That Dropped 33% In The Last Year
Investors can approximate the average market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Investors in Chuan Holdings Limited (HKG:1420) have tasted that bitter downside in the last year, as the share price dropped 33%. That falls noticeably short of the market return of around -2.4%. We wouldn’t rush to judgement on Chuan Holdings because we don’t have a long term history to look at. Furthermore, it’s down 20% in about a quarter. That’s not much fun for holders.
View our latest analysis for Chuan Holdings
Given that Chuan Holdings only made minimal earnings in the last twelve months, we’ll focus on revenue to gauge its business development. Many high growth companies focus on growing revenue before profits, but if revenue is the focus, it really needs to grow. That’s because it’s hard for shareholders to have confidence a company will grow profits significantly if it isn’t growing revenue.
Chuan Holdings’s revenue didn’t grow at all in the last year. In fact, it fell 0.8%. That looks pretty grim, at a glance. Shareholders have seen the share price drop 33% in that time. What would you expect when revenue is falling, and it doesn’t make a profit? It’s hard to escape the conclusion that buyers must envision either growth down the track, cost cutting, or both.
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
Take a more thorough look at Chuan Holdings’s financial health with this free report on its balance sheet.
A Different Perspective
Chuan Holdings shareholders are down 33% for the year, even worse than the market loss of 2.4%. That’s disappointing, but it’s worth keeping in mind that the market-wide selling wouldn’t have helped. With the stock down 20% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Given the relatively short history of this stock, we’d remain pretty wary until we see some strong business performance. Is Chuan Holdings cheap compared to other companies? These 3 valuation measures might help you decide.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
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.
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. Thank you for reading.
