Sihuan Pharmaceutical Holdings Group (HKG:460 shareholders incur further losses as stock declines 7.0% this week, taking three-year losses to 40%

While it may not be enough for some shareholders, we think it is good to see the Sihuan Pharmaceutical Holdings Group Ltd. (HKG:460) share price up 22% in a single quarter. But that cannot eclipse the less-than-impressive returns over the last three years. Truth be told the share price declined 53% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund.

Since Sihuan Pharmaceutical Holdings Group has shed HK$465m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.

See our latest analysis for Sihuan Pharmaceutical Holdings Group

Sihuan Pharmaceutical Holdings Group isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last three years Sihuan Pharmaceutical Holdings Group saw its revenue shrink by 24% per year. That's definitely a weaker result than most pre-profit companies report. Arguably, the market has responded appropriately to this business performance by sending the share price down 15% (annualized) in the same time period. Bagholders or 'baggies' are people who buy more of a stock as the price collapses. They are then left 'holding the bag' if the shares turn out to be worthless. It could be a while before the company repays long suffering shareholders with share price gains.

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

This free interactive report on Sihuan Pharmaceutical Holdings Group's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Sihuan Pharmaceutical Holdings Group's TSR for the last 3 years was -40%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Sihuan Pharmaceutical Holdings Group shareholders gained a total return of 8.8% during the year. But that was short of the market average. On the bright side, that's still a gain, and it's actually better than the average return of 1.8% over half a decade It is possible that returns will improve along with the business fundamentals. It's always interesting to track share price performance over the longer term. But to understand Sihuan Pharmaceutical Holdings Group better, we need to consider many other factors. For example, we've discovered 1 warning sign for Sihuan Pharmaceutical Holdings Group that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Hong Kong 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.