U.S. Markets open in 9 hrs 4 mins

Kinergy Corporation Ltd. (HKG:3302)'s Earnings Grew 8.7%, Is It Enough?

Simply Wall St

When Kinergy Corporation Ltd. (HKG:3302) released its most recent earnings update (31 December 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Kinergy performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see 3302 has performed.

View our latest analysis for Kinergy

Commentary On 3302's Past Performance

3302's trailing twelve-month earnings (from 31 December 2018) of S$8.7m has increased by 8.7% compared to the previous year.

However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 13%, indicating the rate at which 3302 is growing has slowed down. To understand what's happening, let's examine what's going on with margins and whether the entire industry is feeling the heat.

SEHK:3302 Income Statement, July 30th 2019

In terms of returns from investment, Kinergy has fallen short of achieving a 20% return on equity (ROE), recording 9.3% instead. However, its return on assets (ROA) of 7.3% exceeds the HK Electronic industry of 5.2%, indicating Kinergy has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Kinergy’s debt level, has declined over the past 3 years from 20% to 6.9%.

What does this mean?

Though Kinergy's past data is helpful, it is only one aspect of my investment thesis. While Kinergy has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Kinergy to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for 3302’s future growth? Take a look at our free research report of analyst consensus for 3302’s outlook.
  2. Financial Health: Are 3302’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 trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.

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.