Understanding how Shimao Property Holdings Limited (HKG:813) is performing as a company requires looking at more than just a years' earnings. Today I will run you through a basic sense check to gain perspective on how Shimao Property Holdings is doing by comparing its latest earnings with its long-term trend as well as the performance of its real estate industry peers.
How Well Did 813 Perform?
813's trailing twelve-month earnings (from 31 December 2018) of CN¥8.8b has jumped 13% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 0.3%, indicating the rate at which 813 is growing has accelerated. What's the driver of this growth? Let's see whether it is merely a result of industry tailwinds, or if Shimao Property Holdings has seen some company-specific growth.
In terms of returns from investment, Shimao Property Holdings has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 1.9% is below the HK Real Estate industry of 3.3%, indicating Shimao Property Holdings's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Shimao Property Holdings’s debt level, has increased over the past 3 years from 8.6% to 11%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 107% to 104% over the past 5 years.
What does this mean?
Shimao Property Holdings's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Shimao Property Holdings 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 Shimao Property Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 813’s future growth? Take a look at our free research report of analyst consensus for 813’s outlook.
- Financial Health: Are 813’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 December 2018. This may not be consistent with full year annual report figures.
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