Here's Why We Think Uni-President China Holdings (HKG:220) Is Well Worth Watching

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. 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. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

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 Uni-President China Holdings (HKG:220). 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.

See our latest analysis for Uni-President China Holdings

Uni-President China Holdings' Earnings Per Share Are Growing

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That makes EPS growth an attractive quality for any company. Over the last three years, Uni-President China Holdings has grown EPS by 7.6% per year. This may not be setting the world alight, but it does show that EPS is on the upwards trend.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While we note Uni-President China Holdings achieved similar EBIT margins to last year, revenue grew by a solid 2.0% to CN¥29b. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.

Fortunately, we've got access to analyst forecasts of Uni-President China Holdings' future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Uni-President China Holdings Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

First and foremost; there we saw no insiders sell Uni-President China Holdings shares in the last year. But the important part is that President & Executive Director Xinhua Liu spent CN¥1.7m buying stock, at an average price of CN¥5.62. Big buys like that may signal an opportunity; actions speak louder than words.

Does Uni-President China Holdings Deserve A Spot On Your Watchlist?

As previously touched on, Uni-President China Holdings is a growing business, which is encouraging. It's not easy for business to grow EPS, but Uni-President China Holdings has shown the strengths to do just that. Despite there being a solitary insider adding to their holdings, it's enough to consider adding this to the watchlist. Before you take the next step you should know about the 2 warning signs for Uni-President China Holdings that we have uncovered.

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Uni-President China Holdings, you'll probably love this curated collection of companies in HK that have an attractive valuation alongside insider buying in the last three months.

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.