Do China Galaxy Securities' (HKG:6881) Earnings Warrant Your Attention?

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. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in China Galaxy Securities (HKG:6881). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

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China Galaxy Securities' Improving Profits

Even when EPS earnings per share (EPS) growth is unexceptional, company value can be created if this rate is sustained each year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Outstandingly, China Galaxy Securities' EPS shot from CN¥0.58 to CN¥1.00, over the last year. It's not often a company can achieve year-on-year growth of 74%. That could be a sign that the business has reached a true inflection point.

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 China Galaxy Securities' revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. China Galaxy Securities maintained stable EBIT margins over the last year, all while growing revenue 47% to CN¥40b. That's progress.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

See our latest analysis for China Galaxy Securities

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of China Galaxy Securities' forecast profits?

Are China Galaxy Securities Insiders Aligned With All Shareholders?

It's a good habit to check into a company's remuneration policies to ensure that the CEO and management team aren't putting their own interests before that of the shareholder with excessive salary packages. The median total compensation for CEOs of companies similar in size to China Galaxy Securities, with market caps over CN¥57b, is around CN¥4.9m.

The CEO of China Galaxy Securities only received CN¥1.6m in total compensation for the year ending December 2024. That's clearly well below average, so at a glance that arrangement seems generous to shareholders and points to a modest remuneration culture. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. Generally, arguments can be made that reasonable pay levels attest to good decision-making.

Should You Add China Galaxy Securities To Your Watchlist?

China Galaxy Securities' earnings per share have been soaring, with growth rates sky high. With increasing profits, its seems likely the business has a rosy future; and it may have hit an inflection point. At the same time the reasonable CEO compensation reflects well on the board of directors. It will definitely require further research to be sure, but it does seem that China Galaxy Securities has the hallmarks of a quality business; and that would make it well worth watching. You should always think about risks though. Case in point, we've spotted 2 warning signs for China Galaxy Securities you should be aware of, and 1 of them is significant.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in HK with promising growth potential and insider confidence.

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.