Was China 33 Media Group Limited’s (HKG:8087) Earnings Decline A Part Of Broader Industry Downturn?

When China 33 Media Group Limited (SEHK:8087) released its most recent earnings update (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how China 33 Media Group performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see 8087 has performed. See our latest analysis for China 33 Media Group

Commentary On 8087’s Past Performance

I prefer to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend enables me to assess many different companies on a similar basis, using new information. For China 33 Media Group, its most recent earnings (trailing twelve month) is -CN¥65.0M, which, against the prior year’s level, has become more negative. Since these values are relatively short-term, I have created an annualized five-year value for 8087’s net income, which stands at -CN¥38.6M. This doesn’t look much better, since earnings seem to have steadily been getting more and more negative over time.

SEHK:8087 Income Statement Jan 25th 18
SEHK:8087 Income Statement Jan 25th 18
We can further evaluate China 33 Media Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade China 33 Media Group has seen an annual decline in revenue of -20.67%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Scanning growth from a sector-level, the HK media industry has been relatively flat in terms of earnings growth . Thought this is a bit of a turnaround from a volatile drop of -15.73% in the past couple of years. This means whatever near-term the industry is experiencing, it’s hitting China 33 Media Group harder than its peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most valuable step is to assess company-specific issues China 33 Media Group may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research China 33 Media Group to get a better picture of the stock by looking at:

  • 1. Financial Health: Is 8087’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.
  • 2. 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 30 September 2017. This may not be consistent with full year annual report figures.