Understanding China Merchants Port Holdings Company Limited’s (HKG:144) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how China Merchants Port Holdings is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period.
How Well Did 144 Perform?
144’s trailing twelve-month earnings (from 30 June 2018) of HK$8.3b has jumped 20% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 12%, indicating the rate at which 144 is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is merely attributable to an industry uplift, or if China Merchants Port Holdings has experienced some company-specific growth.
In terms of returns from investment, China Merchants Port Holdings has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. However, its return on assets (ROA) of 6.7% exceeds the HK Infrastructure industry of 5.2%, indicating China Merchants Port Holdings has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for China Merchants Port Holdings’s debt level, has declined over the past 3 years from 2.8% to 2.4%.
What does this mean?
Though China Merchants Port Holdings’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as China Merchants Port Holdings gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research China Merchants Port Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for 144’s future growth? Take a look at our free research report of analyst consensus for 144’s outlook.
- Financial Health: Are 144’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 June 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.