South Manganese Investment Limited (HKG:1091) shareholders might be concerned after seeing the share price drop 20% in the last month. But that doesn't change the fact that the returns over the last year have been very strong. Like an eagle, the share price soared 196% in that time. So it is important to view the recent reduction in price through that lense. More important, going forward, is how the business itself is going.
The past week has proven to be lucrative for South Manganese Investment investors, so let's see if fundamentals drove the company's one-year performance.
South Manganese Investment isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over the last twelve months, South Manganese Investment's revenue grew by 35%. We respect that sort of growth, no doubt. The revenue growth is decent but the share price had an even better year, gaining 196%. If the profitability is on the horizon then now could be a very exciting time to be a shareholder. But investors need to be wary of how the 'fear of missing out' could influence them to buy without doing thorough research.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
It's nice to see that South Manganese Investment shareholders have received a total shareholder return of 196% over the last year. That gain is better than the annual TSR over five years, which is 13%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand South Manganese Investment better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for South Manganese Investment (of which 1 is a bit concerning!) you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
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.
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