After looking at Shanghai Jin Jiang Capital Company Limited's (SEHK:2006) latest earnings announcement (30 June 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Shanghai Jin Jiang Capital's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Was 2006's weak performance lately a part of a long-term decline?
2006's trailing twelve-month earnings (from 30 June 2019) of CN¥707m has declined by -7.2% 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 0.07%, indicating the rate at which 2006 is growing has slowed down. Why could this be happening? Let's examine what's transpiring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Shanghai Jin Jiang Capital has fallen short of achieving a 20% return on equity (ROE), recording 7.7% instead. Furthermore, its return on assets (ROA) of 1.9% is below the HK Hospitality industry of 4.6%, indicating Shanghai Jin Jiang Capital's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Shanghai Jin Jiang Capital’s debt level, has increased over the past 3 years from 2.3% to 3.6%.
What does this mean?
Though Shanghai Jin Jiang Capital's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. You should continue to research Shanghai Jin Jiang Capital to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 2006’s future growth? Take a look at our free research report of analyst consensus for 2006’s outlook.
- Financial Health: Are 2006’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 30 June 2019. This may not be consistent with full year annual report figures.
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If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.