Here's Why We Think Aerospace Intelligent Manufacturing Technology (SZSE:300446) Is Well Worth Watching

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Aerospace Intelligent Manufacturing Technology (SZSE:300446). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

See our latest analysis for Aerospace Intelligent Manufacturing Technology

Aerospace Intelligent Manufacturing Technology's Improving Profits

In the last three years Aerospace Intelligent Manufacturing Technology's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. As a result, we'll zoom in on growth over the last year, instead. Outstandingly, Aerospace Intelligent Manufacturing Technology's EPS shot from CN¥0.39 to CN¥0.65, over the last year. It's a rarity to see 67% year-on-year growth like that.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for Aerospace Intelligent Manufacturing Technology remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 12% to CN¥6.6b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Aerospace Intelligent Manufacturing Technology's balance sheet strength, before getting too excited.

Are Aerospace Intelligent Manufacturing Technology Insiders Aligned With All Shareholders?

It's a necessity that company leaders act in the best interest of shareholders and so insider investment always comes as a reassurance to the market. So it is good to see that Aerospace Intelligent Manufacturing Technology insiders have a significant amount of capital invested in the stock. Indeed, they hold CN¥114m worth of its stock. That's a lot of money, and no small incentive to work hard. Despite being just 1.0% of the company, the value of that investment is enough to show insiders have plenty riding on the venture.

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? Our quick analysis into CEO remuneration would seem to indicate they are. For companies with market capitalisations between CN¥7.2b and CN¥23b, like Aerospace Intelligent Manufacturing Technology, the median CEO pay is around CN¥1.4m.

The CEO of Aerospace Intelligent Manufacturing Technology was paid just CN¥175k in total compensation for the year ending December 2023. This total may indicate that the CEO is sacrificing take home pay for performance-based benefits, ensuring that their motivations are synonymous with strong company results. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Should You Add Aerospace Intelligent Manufacturing Technology To Your Watchlist?

Aerospace Intelligent Manufacturing Technology's earnings have taken off in quite an impressive fashion. An added bonus for those interested is that management hold a heap of stock and the CEO pay is quite reasonable, illustrating good cash management. The strong EPS improvement suggests the businesses is humming along. Aerospace Intelligent Manufacturing Technology certainly ticks a few boxes, so we think it's probably well worth further consideration. Even so, be aware that Aerospace Intelligent Manufacturing Technology is showing 3 warning signs in our investment analysis , you should know about...

Although Aerospace Intelligent Manufacturing Technology certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Chinese companies that not only boast of strong growth but have strong insider backing.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com