I Built A List Of Growing Companies And Zonbong Landscape Environmental (HKG:1855) Made The Cut

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

In contrast to all that, I prefer to spend time on companies like Zonbong Landscape Environmental (HKG:1855), which has not only revenues, but also profits. While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

Check out our latest analysis for Zonbong Landscape Environmental

Zonbong Landscape Environmental's Improving Profits

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Zonbong Landscape Environmental has grown its trailing twelve month EPS from CN¥0.22 to CN¥0.23, in the last year. That's a modest gain of 5.8%.

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. Zonbong Landscape Environmental maintained stable EBIT margins over the last year, all while growing revenue 4.7% to CN¥1.0b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

Zonbong Landscape Environmental isn't a huge company, given its market capitalization of HK$633m. That makes it extra important to check on its balance sheet strength.

Are Zonbong Landscape Environmental Insiders Aligned With All Shareholders?

I always like to check up on CEO compensation, because I think that reasonable pay levels, around or below the median, can be a sign that shareholder interests are well considered. I discovered that the median total compensation for the CEOs of companies like Zonbong Landscape Environmental with market caps under CN¥1.3b is about CN¥1.5m.

The Zonbong Landscape Environmental CEO received CN¥834k in compensation for the year ending . That seems pretty reasonable, especially given its below the median for similar sized companies. While the level of CEO compensation isn't a huge factor in my view of the company, 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 Zonbong Landscape Environmental Deserve A Spot On Your Watchlist?

One important encouraging feature of Zonbong Landscape Environmental is that it is growing profits. On top of that, my faith in the board of directors is strengthened by the fact of the reasonable CEO pay. So all in all I think it's worth at least considering for your watchlist. However, before you get too excited we've discovered 3 warning signs for Zonbong Landscape Environmental that you should be aware of.

Although Zonbong Landscape Environmental certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

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.