When SIIC Environment Holdings Ltd. (SGX:BHK) released its most recent earnings update (31 March 2019), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were SIIC Environment Holdings’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not BHK actually performed well. Below is a quick commentary on how I see BHK has performed.
How Well Did BHK Perform?
BHK’s trailing twelve-month earnings (from 31 March 2019) of CN¥588m has jumped 14% 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 19%, indicating the rate at which BHK is growing has slowed down. To understand what’s happening, let’s look at what’s going on with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, SIIC Environment Holdings has fallen short of achieving a 20% return on equity (ROE), recording 6.5% instead. Furthermore, its return on assets (ROA) of 3.9% is below the SG Water Utilities industry of 4.2%, indicating SIIC Environment Holdings’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for SIIC Environment Holdings’s debt level, has declined over the past 3 years from 5.9% to 5.2%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 73% to 121% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While SIIC Environment Holdings has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research SIIC Environment Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for BHK’s future growth? Take a look at our free research report of analyst consensus for BHK’s outlook.
- Financial Health: Are BHK’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 March 2019. This may not be consistent with full year annual report figures.
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