Here's Why We Think Beijing Capital Jiaye Property Services (HKG:2210) Is Well Worth Watching

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

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 Beijing Capital Jiaye Property Services (HKG:2210). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Beijing Capital Jiaye Property Services with the means to add long-term value to shareholders.

Check out our latest analysis for Beijing Capital Jiaye Property Services

Beijing Capital Jiaye Property Services' Improving Profits

Even when EPS earnings per share (EPS) growth is unexceptional, company value can be created if this rate is sustained each year. So it's no surprise that some investors are more inclined to invest in profitable businesses. Beijing Capital Jiaye Property Services' EPS has risen over the last 12 months, growing from CN¥0.68 to CN¥0.82. There's little doubt shareholders would be happy with that 21% gain.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. EBIT margins for Beijing Capital Jiaye Property Services remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 36% to CN¥1.8b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.

Beijing Capital Jiaye Property Services isn't a huge company, given its market capitalisation of HK$566m. That makes it extra important to check on its balance sheet strength.

Are Beijing Capital Jiaye Property Services Insiders Aligned With All Shareholders?

As a general rule, it's worth considering how much the CEO is paid, since unreasonably high rates could be considered against the interests of shareholders. Our analysis has discovered that the median total compensation for the CEOs of companies like Beijing Capital Jiaye Property Services with market caps under CN¥1.4b is about CN¥1.7m.

Beijing Capital Jiaye Property Services' CEO took home a total compensation package worth CN¥1.3m in the year leading up to December 2022. That comes in below the average for similar sized companies and seems pretty reasonable. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of a culture of integrity, in a broader sense.

Should You Add Beijing Capital Jiaye Property Services To Your Watchlist?

One positive for Beijing Capital Jiaye Property Services is that it is growing EPS. That's nice to see. Not only that, but the CEO is paid quite reasonably, which should prompt investors to feel more trusting of the board of directors. So based on its merits, the stock deserves further research, if not an addition to your watchlist. Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Beijing Capital Jiaye Property Services that you should be aware of.

While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in HK with promising growth potential and insider confidence.

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

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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.