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Want To Invest In Dongwu Cement International Limited (HKG:695)? Here's How It Performed Lately

Simply Wall St

Measuring Dongwu Cement International Limited's (SEHK:695) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess 695's recent performance announced on 31 December 2019 and compare these figures to its historical trend and industry movements.

See our latest analysis for Dongwu Cement International

Did 695's recent earnings growth beat the long-term trend and the industry?

695's trailing twelve-month earnings (from 31 December 2019) of CN¥77m has increased by 6.4% 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 71%, indicating the rate at which 695 is growing has slowed down. To understand what's happening, let’s take a look at what’s occurring with margins and if the entire industry is experiencing the hit as well.

SEHK:695 Income Statement May 6th 2020
SEHK:695 Income Statement May 6th 2020

In terms of returns from investment, Dongwu Cement International has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 9.4% exceeds the HK Basic Materials industry of 9.0%, indicating Dongwu Cement International has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Dongwu Cement International’s debt level, has increased over the past 3 years from 0.2% to 21%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 15% to 7.0% over the past 5 years.

What does this mean?

Dongwu Cement International's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Dongwu Cement International 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 Dongwu Cement International to get a better picture of the stock by looking at:

  1. Financial Health: Are 695’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. Valuation: What is 695 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 695 is currently mispriced by the market.

  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 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.