Even though Shenwan Hongyuan (H.K.) (HKG:218) has lost HK$281m market cap in last 7 days, shareholders are still up 402% over 1 year

Shenwan Hongyuan (H.K.) Limited (HKG:218) shareholders might be concerned after seeing the share price drop 23% in the last month. But that cannot eclipse the spectacular share price rise we've seen over the last twelve months. In fact, it is up 402% in that time. So we wouldn't blame sellers for taking some profits. Only time will tell if there is still too much optimism currently reflected in the share price.

In light of the stock dropping 12% in the past week, we want to investigate the longer term story, and see if fundamentals have been the driver of the company's positive one-year return.

Check out our latest analysis for Shenwan Hongyuan (H.K.)

Given that Shenwan Hongyuan (H.K.) didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last twelve months, Shenwan Hongyuan (H.K.)'s revenue grew by 34%. That's a fairly respectable growth rate. Arguably it's more than reflected in the truly wondrous share price gain of 402% in the last year. We're always cautious when the share price is up so much, but there's certainly enough revenue growth to justify taking a closer look at Shenwan Hongyuan (H.K.).

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

It's nice to see that Shenwan Hongyuan (H.K.) shareholders have received a total shareholder return of 402% over the last year. That's better than the annualised return of 2% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Case in point: We've spotted 2 warning signs for Shenwan Hongyuan (H.K.) you should be aware of.

But note: Shenwan Hongyuan (H.K.) 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 Hong Kong 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.