In this commentary, I will examine Sino Grandness Food Industry Group Limited’s (SGX:T4B) latest earnings update (31 December 2018) and compare these figures against its performance over the past couple of years, as well as how the rest of the food industry performed. As an investor, I find it beneficial to assess T4B’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
How Did T4B’s Recent Performance Stack Up Against Its Past?
T4B’s trailing twelve-month earnings (from 31 December 2018) of CN¥345m has declined by -3.0% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 6.0%, indicating the rate at which T4B is growing has slowed down. Why is this? Well, let’s look at what’s occurring with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Sino Grandness Food Industry Group has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. However, its return on assets (ROA) of 8.4% exceeds the SG Food industry of 4.8%, indicating Sino Grandness Food Industry Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Sino Grandness Food Industry Group’s debt level, has declined over the past 3 years from 38% to 16%.
What does this mean?
Though Sino Grandness Food Industry Group’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. I suggest you continue to research Sino Grandness Food Industry Group to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for T4B’s future growth? Take a look at our free research report of analyst consensus for T4B’s outlook.
- Financial Health: Are T4B’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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