The RMH Holdings (HKG:8437) Share Price Is Up 246% And Shareholders Are Boasting About It

RMH Holdings Limited (HKG:8437) shareholders might be concerned after seeing the share price drop 16% in the last quarter. But that doesn't detract from the splendid returns of the last year. Indeed, the share price is up an impressive 246% in that time. So we think most shareholders won't be too upset about the recent fall. The real question is whether the business is trending in the right direction.

View our latest analysis for RMH Holdings

We don't think RMH Holdings' revenue of S$6,891,000 is enough to establish significant demand. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). Investors will be hoping that RMH Holdings can make progress and gain better traction for the business, before it runs low on cash.

Companies that lack both meaningful revenue and profits are usually considered high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. RMH Holdings has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.

RMH Holdings had liabilities exceeding cash by S$875k when it last reported in September 2020, according to our data. That puts it in the highest risk category, according to our analysis. So we're surprised to see the stock up 66% in the last year , but we're happy for holders. Investors must really like its potential. You can click on the image below to see (in greater detail) how RMH Holdings' cash levels have changed over time.

Of course, the truth is that it is hard to value companies without much revenue or profit. However you can take a look at whether insiders have been buying up shares. If they are buying a significant amount of shares, that's certainly a good thing. Luckily we are in a position to provide you with this free chart of insider buying (and selling).

A Different Perspective

Pleasingly, RMH Holdings' total shareholder return last year was 246%. This recent result is much better than the 6% drop suffered by shareholders each year (on average) over the last three. It could well be that the business has turned around -- or else regained the confidence of investors. 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. For example, we've discovered 4 warning signs for RMH Holdings (1 is potentially serious!) that you should be aware of before investing here.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

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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. 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.
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