When Riverine China Holdings Limited (SEHK:1417) released its most recent earnings update (30 June 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Riverine China Holdings’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not 1417 actually performed well. Below is a quick commentary on how I see 1417 has performed. Check out our latest analysis for Riverine China Holdings
Commentary On 1417’s Past Performance
I prefer to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend enables me to examine many different companies in a uniform manner using the most relevant data points. “For Riverine China Holdings, its “, latest earnings is CN¥36.7M, which, in comparison to the previous year’s figure, has moved up by 12.12%. Given that these values may be fairly myopic, I’ve determined an annualized five-year value for Riverine China Holdings’s earnings, which stands at CN¥32.9M. This means generally, Riverine China Holdings has been able to steadily raise its earnings over the past couple of years as well.What’s the driver of this growth? Well, let’s take a look at whether it is only a result of an industry uplift, or if Riverine China Holdings has seen some company-specific growth. In the last few years, Riverine China Holdings increased its bottom line faster than revenue by successfully controlling its costs. This resulted in a margin expansion and profitability over time. Looking at growth from a sector-level, the HK commercial services industry has been growing, albeit, at a unexciting single-digit rate of 4.40% over the prior twelve months, and 8.48% over the past five years. This shows that any near-term headwind the industry is experiencing, Riverine China Holdings is relatively better-cushioned than its peers.
What does this mean?
Though Riverine China Holdings’s past data is helpful, it is only one aspect of my investment thesis. While Riverine China Holdings has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research Riverine China Holdings to get a more holistic view of the stock by looking at:
1. Financial Health: Is 1417’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
2. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.