YiChang HEC ChangJiang Pharmaceutical (HKG:1558) delivers shareholders decent 92% return over 1 year, surging 9.4% in the last week alone

Passive investing in index funds can generate returns that roughly match the overall market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the YiChang HEC ChangJiang Pharmaceutical Co., Ltd. (HKG:1558) share price is up 92% in the last 1 year, clearly besting the market decline of around 0.7% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! Unfortunately the longer term returns are not so good, with the stock falling 52% in the last three years.

After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.

View our latest analysis for YiChang HEC ChangJiang Pharmaceutical

YiChang HEC ChangJiang Pharmaceutical wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

YiChang HEC ChangJiang Pharmaceutical grew its revenue by 330% last year. That's well above most other pre-profit companies. While the share price gain of 92% over twelve months is pretty tasty, you might argue it doesn't fully reflect the strong revenue growth. So quite frankly it could be a good time to investigate YiChang HEC ChangJiang Pharmaceutical in some detail. Human beings have trouble conceptualizing (and valuing) exponential growth. Is that what we're seeing here?

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free report showing analyst forecasts should help you form a view on YiChang HEC ChangJiang Pharmaceutical

A Different Perspective

It's good to see that YiChang HEC ChangJiang Pharmaceutical has rewarded shareholders with a total shareholder return of 92% in the last twelve months. Notably the five-year annualised TSR loss of 9% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. 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 1 warning sign for YiChang HEC ChangJiang Pharmaceutical that you should be aware of before investing here.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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. 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.