Stock Analysis

The 13% return this week takes Touyun Biotech Group's (HKG:1332) shareholders three-year gains to 50%

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One simple way to benefit from the stock market is to buy an index fund. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, Touyun Biotech Group Limited (HKG:1332) shareholders have seen the share price rise 50% over three years, well in excess of the market return (9.0%, not including dividends).

Since it's been a strong week for Touyun Biotech Group shareholders, let's have a look at trend of the longer term fundamentals.

Check out our latest analysis for Touyun Biotech Group

Touyun Biotech Group isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

Touyun Biotech Group actually saw its revenue drop by 7.5% per year over three years. Despite the lack of revenue growth, the stock has returned 14%, compound, over three years. If the company is cutting costs profitability could be on the horizon, but the revenue decline is a prima facie concern.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

SEHK:1332 Earnings and Revenue Growth March 18th 2023

Take a more thorough look at Touyun Biotech Group's financial health with this free report on its balance sheet.

A Different Perspective

We regret to report that Touyun Biotech Group shareholders are down 17% for the year. Unfortunately, that's worse than the broader market decline of 3.8%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 5% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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 instance, we've identified 2 warning signs for Touyun Biotech Group that you should be aware of.

But note: Touyun Biotech Group may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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

Valuation is complex, but we're helping make it simple.

Find out whether Touyun Biotech Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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