Does Kina Securities Limited’s (ASX:KSL) Recent Track Record Look Strong?

After looking at Kina Securities Limited’s (ASX:KSL) latest earnings update (30 June 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. Check out our latest analysis for Kina Securities

Commentary On KSL’s Past Performance

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 enables me to analyze different companies on a more comparable basis, using the latest information. For Kina Securities, its most recent trailing-twelve-month earnings is K23.50M, which compared to the previous year’s figure, has jumped up by 12.42%. Since these values may be fairly myopic, I’ve calculated an annualized five-year figure for Kina Securities’s net income, which stands at K19.40M This suggests that, generally, Kina Securities has been able to increasingly raise its profits over the past couple of years as well.

ASX:KSL Income Statement Mar 6th 18
ASX:KSL Income Statement Mar 6th 18
How has it been able to do this? Let’s see if it is only due to an industry uplift, or if Kina Securities has experienced some company-specific growth. The ascend in earnings seems to be supported by a substantial top-line increase beating its growth rate of costs. Though this has caused a margin contraction, it has made Kina Securities more profitable. Viewing growth from a sector-level, the Australian diversified financial industry has been growing, albeit, at a muted single-digit rate of 9.02% over the previous year, and 5.02% over the past five. This means that whatever uplift the industry is enjoying, Kina Securities is capable of leveraging this to its advantage.

What does this mean?

Kina Securities’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Kina Securities gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Kina Securities to get a more holistic view of the stock by looking at:

  • 1. Financial Health: Is KSL’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 KSL 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 KSL 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 30 June 2017. This may not be consistent with full year annual report figures.