Does Sino Harbour Holdings Group (HKG:1663) Deserve A Spot On Your Watchlist?

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in Sino Harbour Holdings Group (HKG:1663). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

View our latest analysis for Sino Harbour Holdings Group

How Fast Is Sino Harbour Holdings Group Growing Its Earnings Per Share?

Over the last three years, Sino Harbour Holdings Group has grown earnings per share (EPS) like young bamboo after rain; fast, and from a low base. So I don't think the percent growth rate is particularly meaningful. Thus, it makes sense to focus on more recent growth rates, instead. Like a firecracker arcing through the night sky, Sino Harbour Holdings Group's EPS shot from CN¥0.015 to CN¥0.027, over the last year. Year on year growth of 76% is certainly a sight to behold. The best case scenario? That the business has hit a true inflection point.

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. The good news is that Sino Harbour Holdings Group is growing revenues, and EBIT margins improved by 9.4 percentage points to 30%, over the last year. Ticking those two boxes is a good sign of growth, in my book.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

Sino Harbour Holdings Group isn't a huge company, given its market capitalization of HK$340m. That makes it extra important to check on its balance sheet strength.

Are Sino Harbour Holdings Group Insiders Aligned With All Shareholders?

Like standing at the lookout, surveying the horizon at sunrise, insider buying, for some investors, sparks joy. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

The first bit of good news is that no Sino Harbour Holdings Group insiders reported share sales in the last twelve months. Even better, though, is that the CEO, GM & Executive Chairman, Lam Ping Wong, bought a whopping CN¥2.8m worth of shares, paying about CN¥0.14 per share, on average. To me that means at least one insider thinks that the company is doing well - and they are backing that view with cash.

Does Sino Harbour Holdings Group Deserve A Spot On Your Watchlist?

Sino Harbour Holdings Group's earnings have taken off like any random crypto-currency did, back in 2017. Growth investors should find it difficult to look past that strong EPS move. And in fact, it could well signal a fundamental shift in the business economics. If that's the case, you may regret neglecting to put Sino Harbour Holdings Group on your watchlist. It is worth noting though that we have found 3 warning signs for Sino Harbour Holdings Group (1 shouldn't be ignored!) that you need to take into consideration.

The good news is that Sino Harbour Holdings Group 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.

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This article by Simply Wall St is general in nature. 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.
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