With EPS Growth And More, Yixin Group (HKG:2858) Makes An Interesting Case

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Yixin Group (HKG:2858). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

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How Fast Is Yixin Group Growing Its Earnings Per Share?

Over the last three years, Yixin Group has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. As a result, we'll zoom in on growth over the last year, instead. Yixin Group's EPS skyrocketed from CN¥0.086 to CN¥0.12, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 39%.

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. It's noted that Yixin Group's revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. Yixin Group maintained stable EBIT margins over the last year, all while growing revenue 40% to CN¥8.2b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

See our latest analysis for Yixin Group

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. So why not check this interactive chart depicting future EPS estimates, for Yixin Group ?

Are Yixin Group Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

The good news for Yixin Group is that one insider has illustrated their belief in the company's future with a huge purchase of shares in the last 12 months. Indeed, Executive Vice Chairman of the Board Ling Kay Tsang has accumulated shares over the last year, paying a total of CN¥27m at an average price of about CN¥0.60. Big insider buys like that are a rarity and should prompt discussion on the merits of the business.

Along with the insider buying, another encouraging sign for Yixin Group is that insiders, as a group, have a considerable shareholding. We note that their impressive stake in the company is worth CN¥1.2b. This suggests that leadership will be very mindful of shareholders' interests when making decisions!

Does Yixin Group Deserve A Spot On Your Watchlist?

If you believe that share price follows earnings per share you should definitely be delving further into Yixin Group's strong EPS growth. Better still, insiders own a large chunk of the company and one has even been buying more shares. Astute investors will want to keep this stock on watch. Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Yixin Group (1 shouldn't be ignored) you should be aware of.

Keen growth investors love to see insider activity. Thankfully, Yixin Group isn't the only one. You can see a a curated list of Hong Kong companies which have exhibited consistent growth accompanied by high insider ownership.

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

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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.