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Was Technovator International Limited's (HKG:1206) Earnings Decline Part Of A Broader Industry Downturn?

Simply Wall St

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 Technovator International Limited (SEHK:1206) useful as an attempt to give more color around how Technovator International is currently performing.

See our latest analysis for Technovator International

How Well Did 1206 Perform?

1206's trailing twelve-month earnings (from 30 June 2019) of CN¥227m has declined by -15% 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 14%, indicating the rate at which 1206 is growing has slowed down. Why could this be happening? Well, let's look at what's transpiring with margins and if the whole industry is facing the same headwind.

SEHK:1206 Income Statement, December 2nd 2019

In terms of returns from investment, Technovator International has fallen short of achieving a 20% return on equity (ROE), recording 8.5% instead. Furthermore, its return on assets (ROA) of 4.4% is below the HK Electronic industry of 5.2%, indicating Technovator International's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Technovator International’s debt level, has declined over the past 3 years from 10% to 8.7%.

What does this mean?

Technovator International's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting its business. I suggest you continue to research Technovator International to get a better picture of the stock by looking at:

  1. Financial Health: Are 1206’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.
  2. 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 30 June 2019. This may not be consistent with full year annual report figures.

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.

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. Thank you for reading.