Investors bid Genting Hong Kong (HKG:678) up US$763m despite increasing losses YoY, taking one-year return to 196%

By
Simply Wall St
Published
November 09, 2021
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%. For example, the Genting Hong Kong Limited (HKG:678) share price had more than doubled in just one year - up 196%. It's also good to see the share price up 35% over the last quarter. Unfortunately the longer term returns are not so good, with the stock falling 29% in the last three years.

Since it's been a strong week for Genting Hong Kong shareholders, let's have a look at trend of the longer term fundamentals.

See our latest analysis for Genting Hong Kong

Because Genting Hong Kong 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. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Genting Hong Kong actually shrunk its revenue over the last year, with a reduction of 69%. We're a little surprised to see the share price pop 196% in the last year. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. Of course, it could be that the market expected this revenue drop.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
SEHK:678 Earnings and Revenue Growth November 9th 2021

This free interactive report on Genting Hong Kong's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

We're pleased to report that Genting Hong Kong shareholders have received a total shareholder return of 196% over one year. That certainly beats the loss of about 10% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 3 warning signs for Genting Hong Kong (2 are a bit concerning!) that you should be aware of before investing here.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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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