Was Xinyi Glass Holdings Limited’s (HKG:868) Earnings Growth Better Than The Industry’s?
After looking at Xinyi Glass Holdings Limited’s (SEHK:868) latest earnings update (31 December 2017), I found it helpful to revisit the company’s performance in the past couple of years and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is an important aspect. In this article I briefly touch on my key findings. See our latest analysis for Xinyi Glass Holdings
Did 868 beat its long-term earnings growth trend and its industry?
I prefer to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique allows me to examine different stocks on a more comparable basis, using the latest information. For Xinyi Glass Holdings, its most recent trailing-twelve-month earnings is HK$4.01B, which, relative to the prior year’s figure, has increased by 24.91%. Given that these figures are relatively short-term, I have created an annualized five-year value for 868’s earnings, which stands at HK$2.19B This means that, generally, Xinyi Glass Holdings has been able to increasingly grow its profits over the past few years as well.
What’s the driver of this growth? Let’s take a look at whether it is solely because of an industry uplift, or if Xinyi Glass Holdings has experienced some company-specific growth. In the past few years, Xinyi Glass Holdings expanded its bottom line faster than revenue by efficiently controlling its costs. This resulted in a margin expansion and profitability over time. Inspecting growth from a sector-level, the HK auto components industry has been growing its average earnings by double-digit 21.32% over the prior twelve months, and 11.62% over the previous five years. This shows that whatever uplift the industry is profiting from, Xinyi Glass Holdings is able to amplify this to its advantage.
What does this mean?
Xinyi Glass Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Xinyi Glass Holdings to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for 868’s future growth? Take a look at our free research report of analyst consensus for 868’s outlook.
Financial Health: Is 868’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 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
