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In this commentary, I will examine Yuexiu Transport Infrastructure Limited’s (HKG:1052) latest earnings update (31 December 2018) and compare these figures against its performance over the past couple of years, as well as how the rest of the infrastructure industry performed. As an investor, I find it beneficial to assess 1052’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
How Well Did 1052 Perform?
1052’s trailing twelve-month earnings (from 31 December 2018) of CN¥1.1b has jumped 11% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 15%, indicating the rate at which 1052 is growing has slowed down. Why could this be happening? Well, let’s take a look at what’s going on with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, Yuexiu Transport Infrastructure has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 6.0% exceeds the HK Infrastructure industry of 5.5%, indicating Yuexiu Transport Infrastructure has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Yuexiu Transport Infrastructure’s debt level, has increased over the past 3 years from 5.9% to 8.6%.
What does this mean?
Though Yuexiu Transport Infrastructure’s past data is helpful, it is only one aspect of my investment thesis. While Yuexiu Transport Infrastructure 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 Yuexiu Transport Infrastructure to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 1052’s future growth? Take a look at our free research report of analyst consensus for 1052’s outlook.
- Financial Health: Are 1052’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.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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.