Does Tingyi (Cayman Islands) Holding Corp.’s (HKG:322) 35% Earnings Growth Reflect The Long-Term Trend?

For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Tingyi (Cayman Islands) Holding Corp.’s (HKG:322) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.

View our latest analysis for Tingyi (Cayman Islands) Holding

Commentary On 322’s Past Performance

322’s trailing twelve-month earnings (from 31 December 2018) of CN¥2.5b has jumped 35% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -5.5%, indicating the rate at which 322 is growing has accelerated. How has it been able to do this? Let’s take a look at if it is only a result of an industry uplift, or if Tingyi (Cayman Islands) Holding has seen some company-specific growth.

SEHK:322 Income Statement, August 15th 2019
SEHK:322 Income Statement, August 15th 2019

In terms of returns from investment, Tingyi (Cayman Islands) Holding has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. Furthermore, its return on assets (ROA) of 4.8% is below the HK Food industry of 6.1%, indicating Tingyi (Cayman Islands) Holding’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Tingyi (Cayman Islands) Holding’s debt level, has increased over the past 3 years from 9.0% to 13%.

What does this mean?

Tingyi (Cayman Islands) Holding’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Tingyi (Cayman Islands) Holding to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for 322’s future growth? Take a look at our free research report of analyst consensus for 322’s outlook.
  2. Financial Health: Are 322’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2018. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.