Do Infinity Logistics and Transport Ventures's (HKG:1442) Earnings Warrant Your Attention?

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it completely lacks a track record of revenue and profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.

In contrast to all that, I prefer to spend time on companies like Infinity Logistics and Transport Ventures (HKG:1442), which has not only revenues, but also profits. Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.

View our latest analysis for Infinity Logistics and Transport Ventures

How Fast Is Infinity Logistics and Transport Ventures Growing Its Earnings Per Share?

Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So EPS growth can certainly encourage an investor to take note of a stock. Over twelve months, Infinity Logistics and Transport Ventures increased its EPS from RM0.014 to RM0.015. That's a modest gain of 5.5%.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While we note Infinity Logistics and Transport Ventures's EBIT margins were flat over the last year, revenue grew by a solid 16% to RM248m. That's progress.

The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.

While it's always good to see growing profits, you should always remember that a weak balance sheet could come back to bite. So check Infinity Logistics and Transport Ventures's balance sheet strength, before getting too excited.

Are Infinity Logistics and Transport Ventures Insiders Aligned With All Shareholders?

Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.

Although we did see some insider selling (worth -RM2.9m) this was overshadowed by a mountain of buying, totalling RM34m in just one year. I find this encouraging because it suggests they are optimistic about the Infinity Logistics and Transport Ventures's future. It is also worth noting that it was Non- Executive Chairman Jyh Tan who made the biggest single purchase, worth HK$31m, paying HK$0.38 per share.

The good news, alongside the insider buying, for Infinity Logistics and Transport Ventures bulls is that insiders (collectively) have a meaningful investment in the stock. Indeed, they hold RM265m worth of its stock. That's a lot of money, and no small incentive to work hard. Those holdings account for over 10% of the company; visible skin in the game.

While insiders already own a significant amount of shares, and they have been buying more, the good news for ordinary shareholders does not stop there. That's because on our analysis the CEO, Kong Yew Chan, is paid less than the median for similar sized companies. I discovered that the median total compensation for the CEOs of companies like Infinity Logistics and Transport Ventures with market caps between RM839m and RM3.4b is about RM1.4m.

The CEO of Infinity Logistics and Transport Ventures only received RM509k in total compensation for the year ending . That looks like modest pay to me, and may hint at a certain respect for the interests of shareholders. While the level of CEO compensation isn't a huge factor in my view of the company, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of good governance, more generally.

Is Infinity Logistics and Transport Ventures Worth Keeping An Eye On?

As I already mentioned, Infinity Logistics and Transport Ventures is a growing business, which is what I like to see. On top of that, we've seen insiders buying shares even though they already own plenty. That makes the company a prime candidate for my watchlist - and arguably a research priority. You should always think about risks though. Case in point, we've spotted 2 warning signs for Infinity Logistics and Transport Ventures you should be aware of.

As a growth investor I do like to see insider buying. But Infinity Logistics and Transport Ventures isn't the only one. You can see a a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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