Stock Analysis

The 5.3% return this week takes C&D International Investment Group's (HKG:1908) shareholders five-year gains to 660%

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SEHK:1908
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Buying shares in the best businesses can build meaningful wealth for you and your family. While the best companies are hard to find, but they can generate massive returns over long periods. Just think about the savvy investors who held C&D International Investment Group Limited (HKG:1908) shares for the last five years, while they gained 311%. And this is just one example of the epic gains achieved by some long term investors. It's also up 32% in about a month. This could be related to the recent financial results that were recently released - you could check the most recent data by reading our company report.

Since the stock has added CN¥1.7b to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Before we look at the performance, you might like to know that our analysis indicates that 1908 is potentially undervalued!

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the last half decade, C&D International Investment Group became profitable. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here. Since the company was unprofitable five years ago, but not three years ago, it's worth taking a look at the returns in the last three years, too. Indeed, the C&D International Investment Group share price has gained 151% in three years. In the same period, EPS is up 6.2% per year. Notably, the EPS growth has been slower than the annualised share price gain of 36% over three years. So it's fair to assume the market has a higher opinion of the business than it did three years ago.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
SEHK:1908 Earnings Per Share Growth October 4th 2022

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on C&D International Investment Group's earnings, revenue and cash flow.

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between C&D International Investment Group's total shareholder return (TSR) and its share price return. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Its history of dividend payouts mean that C&D International Investment Group's TSR of 660% over the last 5 years is better than the share price return.

A Different Perspective

It's nice to see that C&D International Investment Group shareholders have received a total shareholder return of 53% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 50% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for C&D International Investment Group (of which 1 is a bit unpleasant!) you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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

Valuation is complex, but we're helping make it simple.

Find out whether C&D International Investment Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

About SEHK:1908

C&D International Investment Group

C&D International Investment Group Limited, an investment holding company, engages in the property development, real estate industry chain investment services, and industry investment activities in Mainland China, Hong Kong, Macau, Taiwan, and internationally.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation4
Future Growth5
Past Performance5
Financial Health4
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Solid track record with high growth potential.