Beijing Hanjian Heshan PipelineLtd (SHSE:603616 investor five-year losses grow to 63% as the stock sheds CN¥164m this past week

We think intelligent long term investing is the way to go. But along the way some stocks are going to perform badly. For example the Beijing Hanjian Heshan Pipeline Co.,Ltd (SHSE:603616) share price dropped 63% over five years. That is extremely sub-optimal, to say the least. And it's not just long term holders hurting, because the stock is down 41% in the last year. Unfortunately the share price momentum is still quite negative, with prices down 30% in thirty days.

Since Beijing Hanjian Heshan PipelineLtd has shed CN¥164m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Beijing Hanjian Heshan PipelineLtd

Because Beijing Hanjian Heshan PipelineLtd made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

Over half a decade Beijing Hanjian Heshan PipelineLtd reduced its trailing twelve month revenue by 12% for each year. That's definitely a weaker result than most pre-profit companies report. It seems appropriate, then, that the share price slid about 10% annually during that time. It's fair to say most investors don't like to invest in loss making companies with falling revenue. You'd want to research this company pretty thoroughly before buying, it looks a bit too risky for us.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

This free interactive report on Beijing Hanjian Heshan PipelineLtd's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Beijing Hanjian Heshan PipelineLtd shareholders are down 41% for the year, but the market itself is up 7.2%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 10% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 1 warning sign for Beijing Hanjian Heshan PipelineLtd you should be aware of.

Of course Beijing Hanjian Heshan PipelineLtd may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.