Despite currently being unprofitable, Hainan Shuangcheng Pharmaceuticals (SZSE:002693) has delivered a 229% return to shareholders over 3 years

Hainan Shuangcheng Pharmaceuticals Co., Ltd. (SZSE:002693) shareholders might understandably be very concerned that the share price has dropped 49% in the last quarter. But in three years the returns have been great. The share price marched upwards over that time, and is now 229% higher than it was. After a run like that some may not be surprised to see prices moderate. The fundamental business performance will ultimately dictate whether the top is in, or if this is a stellar buying opportunity.

Although Hainan Shuangcheng Pharmaceuticals has shed CN¥958m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.

View our latest analysis for Hainan Shuangcheng Pharmaceuticals

Because Hainan Shuangcheng Pharmaceuticals 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Hainan Shuangcheng Pharmaceuticals actually saw its revenue drop by 18% per year over three years. So we wouldn't have expected the share price to gain 49% per year, but it has. It's a good reminder that expectations about the future, not the past history, always impact share prices.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

If you are thinking of buying or selling Hainan Shuangcheng Pharmaceuticals stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

It's nice to see that Hainan Shuangcheng Pharmaceuticals shareholders have received a total shareholder return of 139% over the last year. That gain is better than the annual TSR over five years, which is 24%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Hainan Shuangcheng Pharmaceuticals better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Hainan Shuangcheng Pharmaceuticals you should be aware of.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

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.