Stock Analysis

Here's Why JBM (Healthcare) (HKG:2161) Has Caught The Eye Of Investors

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For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like JBM (Healthcare) (HKG:2161). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

View our latest analysis for JBM (Healthcare)

How Fast Is JBM (Healthcare) Growing?

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. JBM (Healthcare) managed to grow EPS by 4.1% per year, over three years. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. JBM (Healthcare) shareholders can take confidence from the fact that EBIT margins are up from 10% to 14%, and revenue is growing. Both of which are great metrics to check off for potential growth.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

SEHK:2161 Earnings and Revenue History November 1st 2023

Since JBM (Healthcare) is no giant, with a market capitalisation of HK$1.1b, you should definitely check its cash and debt before getting too excited about its prospects.

Are JBM (Healthcare) Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

One gleaming positive for JBM (Healthcare), in the last year, is that a certain insider has buying shares with ample enthusiasm. In one fell swoop, Non-Executive Chairman of the Board Kwong Yip Sum, spent HK$24m, at a price of HK$0.50 per share. Seeing such high conviction in the company is a huge positive for shareholders and should instil confidence in their mission.

Along with the insider buying, another encouraging sign for JBM (Healthcare) is that insiders, as a group, have a considerable shareholding. As a matter of fact, their holding is valued at HK$231m. That shows significant buy-in, and may indicate conviction in the business strategy. As a percentage, this totals to 22% of the shares on issue for the business, an appreciable amount considering the market cap.

Is JBM (Healthcare) Worth Keeping An Eye On?

As previously touched on, JBM (Healthcare) is a growing business, which is encouraging. Better yet, insiders are significant shareholders, and have been buying more shares. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. Don't forget that there may still be risks. For instance, we've identified 3 warning signs for JBM (Healthcare) (1 shouldn't be ignored) you should be aware of.

The good news is that JBM (Healthcare) is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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

Find out whether JBM (Healthcare) 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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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.