Today I will examine CITIC Telecom International Holdings Limited’s (HKG:1883) latest earnings update (31 December 2018) and compare these figures against its performance over the past couple of years, in addition to how the rest of 1883’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
Could 1883 beat the long-term trend and outperform its industry?
1883’s trailing twelve-month earnings (from 31 December 2018) of HK$951m has increased by 7.9% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 3.7%, indicating the rate at which 1883 is growing has accelerated. What’s the driver of this growth? Let’s take a look at if it is merely due to industry tailwinds, or if CITIC Telecom International Holdings has seen some company-specific growth.
In terms of returns from investment, CITIC Telecom International Holdings has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 7.1% exceeds the HK Telecom industry of 5.2%, indicating CITIC Telecom International Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for CITIC Telecom International Holdings’s debt level, has increased over the past 3 years from 9.0% to 9.4%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 125% to 77% over the past 5 years.
What does this mean?
CITIC Telecom International Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While CITIC Telecom International Holdings has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research CITIC Telecom International Holdings to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 1883’s future growth? Take a look at our free research report of analyst consensus for 1883’s outlook.
- Financial Health: Are 1883’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 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.