Is Now The Time To Put Sino Harbour Holdings Group (HKG:1663) On Your Watchlist?

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. Unfortunately, high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson.

In contrast to all that, I prefer to spend time on companies like Sino Harbour Holdings Group (HKG:1663), which has not only revenues, but also profits. While profit is not necessarily a social good, it's easy to admire a business that can consistently produce it. 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. As a result, I'll zoom in on growth over the last year, instead. Like a firecracker arcing through the night sky, Sino Harbour Holdings Group's EPS shot from CN¥0.027 to CN¥0.07, over the last year. Year on year growth of 160% is certainly a sight to behold. The best case scenario? That the business has hit a true inflection point.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. Sino Harbour Holdings Group shareholders can take confidence from the fact that EBIT margins are up from 30% to 52%, and revenue is growing. That's great to see, on both counts.

In the chart below, you can see how the company has grown earnings, and revenue, over time. To see the actual numbers, click on the chart.

Since Sino Harbour Holdings Group is no giant, with a market capitalization of HK$345m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Sino Harbour Holdings Group Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

First things first; I didn't see insiders sell Sino Harbour Holdings Group shares in the last year. But the really good news is that CEO, GM & Executive Chairman Lam Ping Wong spent CN¥3.3m buying stock stock, at an average price of around CN¥0.15. Big buys like that give me a sense of opportunity; actions speak louder than words.

It's reassuring that Sino Harbour Holdings Group insiders are buying the stock, but that's not the only reason to think management are fair to shareholders. Specifically, the CEO is paid quite reasonably for a company of this size. For companies with market capitalizations under CN¥1.3b, like Sino Harbour Holdings Group, the median CEO pay is around CN¥1.5m.

The Sino Harbour Holdings Group CEO received CN¥1.1m in compensation for the year ending . That comes in below the average for similar sized companies, and seems pretty reasonable to me. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. I'd also argue reasonable pay levels attest to good decision making more generally.

Is Sino Harbour Holdings Group Worth Keeping An Eye On?

Sino Harbour Holdings Group's earnings per share growth have been levitating higher, like a mountain goat scaling the Alps. Better yet, we can observe insider buying and the chief executive pay looks reasonable. It could be that Sino Harbour Holdings Group is at an inflection point, given the EPS growth. For those chasing fast growth, then, I'd suggest to stock merits monitoring. You still need to take note of risks, for example - Sino Harbour Holdings Group has 2 warning signs we think you should be aware of.

As a growth investor I do like to see insider buying. But Sino Harbour Holdings Group isn't the only one. You can see a a free list of them here.

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.