Even after rising 13% this past week, Hua Medicine (Shanghai) (HKG:2552) shareholders are still down 55% over the past three years

Simply Wall St
February 21, 2022
Source: Shutterstock

Hua Medicine (Shanghai) Ltd. (HKG:2552) shareholders should be happy to see the share price up 13% in the last week. Meanwhile over the last three years the stock has dropped hard. In that time, the share price dropped 55%. So it is really good to see an improvement. The rise has some hopeful, but turnarounds are often precarious.

While the stock has risen 13% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

Check out our latest analysis for Hua Medicine (Shanghai)

Given that Hua Medicine (Shanghai) didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last three years, Hua Medicine (Shanghai) saw its revenue grow by 2.4% per year, compound. That's not a very high growth rate considering it doesn't make profits. This uninspiring revenue growth has no doubt helped send the share price lower; it dropped 16% during the period. It can be well worth keeping an eye on growth stocks that disappoint the market, because sometimes they re-accelerate. After all, growing a business isn't easy, and the process will not always be smooth.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

SEHK:2552 Earnings and Revenue Growth February 21st 2022

This free interactive report on Hua Medicine (Shanghai)'s balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

Hua Medicine (Shanghai) shareholders are down 26% for the year, falling short of the market return. Meanwhile, the broader market slid about 18%, likely weighing on the stock. Shareholders have lost 16% per year over the last three years, so the share price drop has become steeper, over the last year; a potential symptom of as yet unsolved challenges. We would be wary of buying into a company with unsolved problems, although some investors will buy into struggling stocks if they believe the price is sufficiently attractive. It's always interesting to track share price performance over the longer term. But to understand Hua Medicine (Shanghai) better, we need to consider many other factors. For example, we've discovered 1 warning sign for Hua Medicine (Shanghai) that you should be aware of before investing here.

But note: Hua Medicine (Shanghai) 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 HK exchanges.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.