Assessing Sunshine 100 China Holdings Ltd’s (HKG:2608) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess 2608’s recent performance announced on 30 June 2018 and evaluate these figures to its longer term trend and industry movements.
How Did 2608’s Recent Performance Stack Up Against Its Past?2608’s trailing twelve-month earnings (from 30 June 2018) of CN¥524.2m has increased by 7.1% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 2.2%, indicating the rate at which 2608 is growing has accelerated. How has it been able to do this? Let’s take a look at if it is merely a result of industry tailwinds, or if Sunshine 100 China Holdings has seen some company-specific growth.
The hike in earnings seems to be supported by a strong top-line increase outstripping its growth rate of expenses. Though this resulted in a margin contraction, it has made Sunshine 100 China Holdings more profitable. Looking at growth from a sector-level, the HK real estate industry has been growing its average earnings by double-digit 48.5% over the past year, and a less exciting 6.7% over the past five. This growth is a median of profitable companies of 25 Real Estate companies in HK including Sino Harbour Holdings Group, Tian An China Investments and Chuang’s China Investments. This shows that whatever uplift the industry is deriving benefit from, Sunshine 100 China Holdings has not been able to realize the gains unlike its average peer.In terms of returns from investment, Sunshine 100 China Holdings has fallen short of achieving a 20% return on equity (ROE), recording 8.6% instead. Furthermore, its return on assets (ROA) of 1.2% is below the HK Real Estate industry of 3.7%, indicating Sunshine 100 China Holdings’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Sunshine 100 China Holdings’s debt level, has declined over the past 3 years from 3.0% to 1.0%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be variables that are affecting the industry as a whole, thus the high industry growth rate over the same period of time. You should continue to research Sunshine 100 China Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 2608’s future growth? Take a look at our free research report of analyst consensus for 2608’s outlook.
- Financial Health: Are 2608’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.