Examining how Changhong Jiahua Holdings Limited (HKG:8016) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Changhong Jiahua Holdings is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its electronic industry peers.
Commentary On 8016’s Past Performance
8016’s trailing twelve-month earnings (from 30 September 2018) of HK$276m has jumped 17% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 11%, indicating the rate at which 8016 is growing has accelerated. What’s enabled this growth? Let’s take a look at whether it is merely because of an industry uplift, or if Changhong Jiahua Holdings has seen some company-specific growth.
In terms of returns from investment, Changhong Jiahua Holdings has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 6.8% exceeds the HK Electronic industry of 5.6%, indicating Changhong Jiahua Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Changhong Jiahua Holdings’s debt level, has increased over the past 3 years from 22% to 24%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 111% to 65% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Changhong Jiahua Holdings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Changhong Jiahua Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 8016’s future growth? Take a look at our free research report of analyst consensus for 8016’s outlook.
- Financial Health: Are 8016’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 September 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.