For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on China Hanya Group Holdings Limited (SEHK:8312) useful as an attempt to give more color around how China Hanya Group Holdings is currently performing. See our latest analysis for China Hanya Group Holdings
Was 8312’s weak performance lately a part of a long-term decline?
I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This blend allows me to assess different companies on a similar basis, using the latest information. For China Hanya Group Holdings, its most recent trailing-twelve-month earnings is -HK$22.4M, which compared to the prior year’s level, has become more negative. Given that these values are somewhat myopic, I’ve determined an annualized five-year figure for China Hanya Group Holdings’s net income, which stands at -HK$6.5M. This doesn’t seem to paint a better picture, as earnings seem to have gradually been getting more and more negative over time.Additionally, we can analyze China Hanya Group Holdings’s loss by looking at what has been happening in the industry as well as within the company. First, I want to briefly look into the line items. Revenue growth over the last few years has been negative at -28.60%. The key to profitability here is to make sure the company’s cost growth is well-managed. Eyeballing growth from a sector-level, the HK retail distributors industry has been growing its average earnings by double-digit 11.70% over the prior year, . This is a turnaround from a volatile drop of -2.20% in the last couple of years. This means that whatever uplift the industry is profiting from, China Hanya Group Holdings has not been able to realize the gains unlike its industry peers.
What does this mean?
China Hanya Group Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most insightful step is to assess company-specific issues China Hanya Group Holdings may be facing and whether management guidance has dependably been met in the past. I recommend you continue to research China Hanya Group Holdings to get a better picture of the stock by looking at:
1. Financial Health: Is 8312’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.
2. 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 September 2017. This may not be consistent with full year annual report figures.