With EPS Growth And More, Kaisa Capital Investment Holdings (HKG:936) Makes An Interesting Case

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Kaisa Capital Investment Holdings (HKG:936). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Kaisa Capital Investment Holdings with the means to add long-term value to shareholders.

View our latest analysis for Kaisa Capital Investment Holdings

How Fast Is Kaisa Capital Investment Holdings Growing Its Earnings Per Share?

Over the last three years, Kaisa Capital Investment Holdings has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. Thus, it makes sense to focus on more recent growth rates, instead. Kaisa Capital Investment Holdings boosted its trailing twelve month EPS from HK$0.0042 to HK$0.0051, in the last year. That's a 23% gain; respectable growth in the broader scheme of things.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. EBIT margins for Kaisa Capital Investment Holdings remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 6.4% to HK$230m. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

Kaisa Capital Investment Holdings isn't a huge company, given its market capitalisation of HK$270m. That makes it extra important to check on its balance sheet strength.

Are Kaisa Capital Investment Holdings Insiders Aligned With All Shareholders?

Prior to investment, it's always a good idea to check that the management team is paid reasonably. Pay levels around or below the median, can be a sign that shareholder interests are well considered. For companies with market capitalisations under HK$1.6b, like Kaisa Capital Investment Holdings, the median CEO pay is around HK$1.8m.

Kaisa Capital Investment Holdings' CEO took home a total compensation package of HK$661k in the year prior to December 2022. That's clearly well below average, so at a glance that arrangement seems generous to shareholders and points to a modest remuneration culture. 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.

Does Kaisa Capital Investment Holdings Deserve A Spot On Your Watchlist?

One positive for Kaisa Capital Investment Holdings is that it is growing EPS. That's nice to see. To add to this, the modest CEO compensation should tell investors that the directors have an active interest in delivering the best for shareholders. So based on its merits, the stock deserves further research, if not an addition to your watchlist. You should always think about risks though. Case in point, we've spotted 2 warning signs for Kaisa Capital Investment Holdings you should be aware of, and 1 of them can't be ignored.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.

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.