Stock Analysis

Is Now The Time To Put China-Hongkong Photo Products Holdings (HKG:1123) On Your Watchlist?

SEHK:1123
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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 currently lacks a track record of revenue and profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in China-Hongkong Photo Products Holdings (HKG:1123). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

View our latest analysis for China-Hongkong Photo Products Holdings

China-Hongkong Photo Products Holdings' Improving Profits

China-Hongkong Photo Products Holdings has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. So it would be better to isolate the growth rate over the last year for our analysis. China-Hongkong Photo Products Holdings' EPS skyrocketed from HK$0.015 to HK$0.023, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 52%.

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. EBIT margins for China-Hongkong Photo Products Holdings remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 14% to HK$1.1b. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

earnings-and-revenue-history
SEHK:1123 Earnings and Revenue History January 25th 2023

Since China-Hongkong Photo Products Holdings is no giant, with a market capitalisation of HK$166m, you should definitely check its cash and debt before getting too excited about its prospects.

Are China-Hongkong Photo Products Holdings Insiders Aligned With All Shareholders?

Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So as you can imagine, the fact that China-Hongkong Photo Products Holdings insiders own a significant number of shares certainly is appealing. To be exact, company insiders hold 60% of the company, so their decisions have a significant impact on their investments. Intuition will tell you this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. Of course, China-Hongkong Photo Products Holdings is a very small company, with a market cap of only HK$166m. That means insiders only have HK$100m worth of shares, despite the large proportional holding. That might not be a huge sum but it should be enough to keep insiders motivated!

Does China-Hongkong Photo Products Holdings Deserve A Spot On Your Watchlist?

For growth investors, China-Hongkong Photo Products Holdings' raw rate of earnings growth is a beacon in the night. This EPS growth rate is something the company should be proud of, and so it's no surprise that insiders are holding on to a considerable chunk of shares. The growth and insider confidence is looked upon well and so it's worthwhile to investigate further with a view to discern the stock's true value. It's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with China-Hongkong Photo Products Holdings , and understanding these should be part of your investment process.

The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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.

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

Find out whether China-Hongkong Photo Products Holdings 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.

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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.