Investors in Sino Hotels (Holdings) (HKG:1221) from three years ago are still down 30%, even after 10% gain this past week

This week we saw the Sino Hotels (Holdings) Limited (HKG:1221) share price climb by 10%. But that doesn't help the fact that the three year return is less impressive. In fact, the share price is down 32% in the last three years, falling well short of the market return.

While the stock has risen 10% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

Check out our latest analysis for Sino Hotels (Holdings)

Because Sino Hotels (Holdings) made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Over the last three years, Sino Hotels (Holdings)'s revenue dropped 39% per year. That's definitely a weaker result than most pre-profit companies report. With revenue in decline, the share price decline of 10% per year is hardly undeserved. The key question now is whether the company has the capacity to fund itself to profitability, without more cash. Of course, it is possible for businesses to bounce back from a revenue drop - but we'd want to see that before getting interested.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Sino Hotels (Holdings)'s total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Dividends have been really beneficial for Sino Hotels (Holdings) shareholders, and that cash payout explains why its total shareholder loss of 30%, over the last 3 years, isn't as bad as the share price return.

A Different Perspective

While it's never nice to take a loss, Sino Hotels (Holdings) shareholders can take comfort that their trailing twelve month loss of 6.1% wasn't as bad as the market loss of around 18%. Unfortunately, last year's performance may indicate unresolved challenges, given that it's worse than the annualised loss of 1.8% over the last half decade. While some investors do well specializing in buying companies that are struggling (but nonetheless undervalued), don't forget that Buffett said that 'turnarounds seldom turn'. It's always interesting to track share price performance over the longer term. But to understand Sino Hotels (Holdings) better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Sino Hotels (Holdings) you should know about.

But note: Sino Hotels (Holdings) may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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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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.