CEFC Hong Kong Financial Investment (HKG:1520) shareholder returns have been solid, earning 139% in 1 year

By
Simply Wall St
Published
December 16, 2021
SEHK:1520
Source: Shutterstock

Unfortunately, investing is risky - companies can and do go bankrupt. But when you pick a company that is really flourishing, you can make more than 100%. Take, for example CEFC Hong Kong Financial Investment Company Limited (HKG:1520). Its share price is already up an impressive 139% in the last twelve months. And in the last week the share price has popped 67%. Looking back further, the stock price is 38% higher than it was three years ago.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

Check out our latest analysis for CEFC Hong Kong Financial Investment

CEFC Hong Kong Financial Investment isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

In the last year CEFC Hong Kong Financial Investment saw its revenue shrink by 8.1%. So we would not have expected the share price to rise 139%. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. It's quite likely the revenue fall was already priced in, anyway.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
SEHK:1520 Earnings and Revenue Growth December 16th 2021

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. It might be well worthwhile taking a look at our free report on CEFC Hong Kong Financial Investment's earnings, revenue and cash flow.

A Different Perspective

It's nice to see that CEFC Hong Kong Financial Investment shareholders have received a total shareholder return of 139% over the last year. Notably the five-year annualised TSR loss of 11% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 3 warning signs for CEFC Hong Kong Financial Investment (1 is a bit unpleasant) that you should be aware of.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

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