Here's Why I Think Allied Sustainability and Environmental Consultants Group (HKG:8320) Might Deserve Your Attention Today

By
Simply Wall St
Published
April 15, 2022
SEHK:8320
Source: Shutterstock

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Allied Sustainability and Environmental Consultants Group (HKG:8320). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

See our latest analysis for Allied Sustainability and Environmental Consultants Group

Allied Sustainability and Environmental Consultants Group's Improving Profits

In the last three years Allied Sustainability and Environmental Consultants Group's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. As a result, I'll zoom in on growth over the last year, instead. It's good to see that Allied Sustainability and Environmental Consultants Group's EPS have grown from HK$0.0021 to HK$0.0024 over twelve months. I doubt many would complain about that 14% gain.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. Allied Sustainability and Environmental Consultants Group shareholders can take confidence from the fact that EBIT margins are up from -2.9% to 5.8%, and revenue is growing. That's great to see, on both counts.

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.

earnings-and-revenue-history
SEHK:8320 Earnings and Revenue History April 15th 2022

Since Allied Sustainability and Environmental Consultants Group is no giant, with a market capitalization of HK$69m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Allied Sustainability and Environmental Consultants Group Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

The good news for Allied Sustainability and Environmental Consultants Group shareholders is that no insiders reported selling shares in the last year. With that in mind, it's heartening that Pak kit Wu, the Executive Vice Chairman of the Board of the company, paid HK$82k for shares at around HK$0.14 each.

Should You Add Allied Sustainability and Environmental Consultants Group To Your Watchlist?

One positive for Allied Sustainability and Environmental Consultants Group is that it is growing EPS. That's nice to see. While some companies are struggling to grow EPS, Allied Sustainability and Environmental Consultants Group seems free from that morose affliction. The icing on the cake is that an insider bought shares during the year, which inclines me to put this one on a watchlist. You still need to take note of risks, for example - Allied Sustainability and Environmental Consultants Group has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

As a growth investor I do like to see insider buying. But Allied Sustainability and Environmental Consultants Group isn't the only one. You can see a a free list of them here.

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

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.