Is Ximei Resources Holding's (HKG:9936) Share Price Gain Of 121% Well Earned?

By
Simply Wall St
Published
May 25, 2021
SEHK:9936
Source: Shutterstock

Unless you borrow money to invest, the potential losses are limited. But if you pick the right stock, you can make a lot more than 100%. For example, the Ximei Resources Holding Limited (HKG:9936) share price has soared 121% in the last year. Most would be very happy with that, especially in just one year! It's also good to see the share price up 78% over the last quarter. Ximei Resources Holding hasn't been listed for long, so it's still not clear if it is a long term winner.

Check out our latest analysis for Ximei Resources Holding

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

During the last year, Ximei Resources Holding actually saw its earnings per share drop 20%.

This means it's unlikely the market is judging the company based on earnings growth. Indeed, when EPS is declining but the share price is up, it often means the market is considering other factors.

Revenue was pretty stable on last year, so deeper research might be needed to explain the share price rise.

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

earnings-and-revenue-growth
SEHK:9936 Earnings and Revenue Growth May 26th 2021

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. Dive deeper into the earnings by checking this interactive graph of Ximei Resources Holding's earnings, revenue and cash flow.

A Different Perspective

Ximei Resources Holding boasts a total shareholder return of 121% for the last year. A substantial portion of that gain has come in the last three months, with the stock up 78% in that time. This suggests the company is continuing to win over new 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 3 warning signs for Ximei Resources Holding (2 shouldn't be ignored!) that you should be aware of before investing here.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

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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