Is Now The Time To Put Prinx Chengshan Holdings (HKG:1809) On Your Watchlist?

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. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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 Prinx Chengshan Holdings (HKG:1809). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

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Prinx Chengshan Holdings' Improving Profits

Prinx Chengshan Holdings has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. To the delight of shareholders, Prinx Chengshan Holdings' EPS soared from CN¥1.62 to CN¥2.05, over the last year. That's a impressive gain of 27%.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. EBIT margins for Prinx Chengshan Holdings remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 10% to CN¥11b. That's encouraging news for the company!

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.

View our latest analysis for Prinx Chengshan Holdings

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are Prinx Chengshan Holdings Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

The good news for Prinx Chengshan Holdings shareholders is that no insiders reported selling shares in the last year. Add in the fact that Futao Shi, the Executive Director of the company, paid CN¥207k for shares at around CN¥6.90 each. Purchases like this can help the investors understand the views of the management team; in which case they see some potential in Prinx Chengshan Holdings.

Should You Add Prinx Chengshan Holdings To Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Prinx Chengshan Holdings' strong EPS growth. Not only is that growth rate rather juicy, but the insider buying adds fuel to the fire. To put it succinctly; Prinx Chengshan Holdings is a strong candidate for your watchlist. Another important measure of business quality not discussed here, is return on equity (ROE). Click on this link to see how Prinx Chengshan Holdings shapes up to industry peers, when it comes to ROE.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Prinx Chengshan Holdings, you'll probably love this curated collection of companies in HK that have an attractive valuation alongside insider buying in the last three months.

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

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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.