Is Now The Time To Put Sino Harbour Holdings Group (HKG:1663) 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. 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.

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). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

See our latest analysis for Sino Harbour Holdings Group

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

In the last three years Sino Harbour Holdings Group's earnings per share took off like a rocket; fast, and from a low base. So the actual rate of growth doesn't tell us much. 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. You don't see 76% year-on-year growth like that, very often. That could be a sign that the business has reached 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.

In the chart below, you can see how the company has grown earnings, and revenue, over time. Click on the chart to see the exact numbers.

Sino Harbour Holdings Group isn't a huge company, given its market capitalization of HK$370m. That makes it extra important to check on its balance sheet strength.

Are Sino Harbour Holdings Group Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. 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.

It's good to see Sino Harbour Holdings Group insiders walking the walk, by spending CN¥3.7m on shares in just twelve months. And when you consider that there was no insider selling, you can understand why shareholders might believe that lady luck will grace this business. It is also worth noting that it was Heung Ling Chan who made the biggest single purchase, worth HK$264k, paying HK$0.14 per share.

Is Sino Harbour Holdings Group Worth Keeping An Eye On?

Sino Harbour Holdings Group's earnings per share have taken off like a rocket aimed right at the moon. If you're like me, you'll find it hard to ignore that sort of explosive EPS growth. 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. We should say that we've discovered 4 warning signs for Sino Harbour Holdings Group (1 is potentially serious!) that you should be aware of before investing here.

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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