Has Lee Kee Holdings Limited’s (HKG:637) Earnings Momentum Changed Recently?
For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Lee Kee Holdings Limited (HKG:637) useful as an attempt to give more color around how Lee Kee Holdings is currently performing.
Check out our latest analysis for Lee Kee Holdings
Could 637 beat the long-term trend and outperform its industry?
637 recently turned a profit of HK$90.2m (most recent trailing twelve-months) compared to its average loss of -HK$8.8m over the past five years.
In the last couple of years, Lee Kee Holdings expanded bottom-line, while its top-line declined, by efficiently managing its costs. This brought about to a margin expansion and profitability over time.
Eyeballing growth from a sector-level, the HK trade distributors industry has been ramping up average earnings growth of 67.0% in the prior twelve months, and a robust 18.7% over the previous five years. This growth is a median of profitable companies of 24 Trade Distributors companies in HK including Progressive Path Group Holdings, Jiyi Household International Holdings and Softpower International. This means that whatever tailwind the industry is benefiting from, Lee Kee Holdings is capable of amplifying this to its advantage.
In terms of returns from investment, Lee Kee Holdings has fallen short of achieving a 20% return on equity (ROE), recording 8.1% instead. Furthermore, its return on assets (ROA) of 6.5% is below the HK Trade Distributors industry of 6.6%, indicating Lee Kee Holdings’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Lee Kee Holdings’s debt level, has increased over the past 3 years from 1.7% to 8.0%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Lee Kee Holdings 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 Lee Kee Holdings to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 637’s future growth? Take a look at our free research report of analyst consensus for 637’s outlook.
Financial Health: Are 637’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.
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 March 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
