Even though Hainan Meilan International Airport (HKG:357) has lost CN¥852m market cap in last 7 days, shareholders are still up 243% over 3 years

By
Simply Wall St
Published
February 24, 2022
SEHK:357
Source: Shutterstock

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But in contrast you can make much more than 100% if the company does well. To wit, the Hainan Meilan International Airport Company Limited (HKG:357) share price has flown 243% in the last three years. Most would be happy with that. It's also up 12% in about a month.

Since the long term performance has been good but there's been a recent pullback of 7.2%, let's check if the fundamentals match the share price.

View our latest analysis for Hainan Meilan International Airport

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During the three years of share price growth, Hainan Meilan International Airport actually saw its earnings per share (EPS) drop 96% per year. In this instance, recent extraordinary items impacted the earnings.

Thus, it seems unlikely that the market is focussed on EPS growth at the moment. Given this situation, it makes sense to look at other metrics too.

The revenue drop of 5.1% is as underwhelming as some politicians. The only thing that's clear is there is low correlation between Hainan Meilan International Airport's share price and its historic fundamental data. Further research may be required!

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
SEHK:357 Earnings and Revenue Growth February 24th 2022

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. So it makes a lot of sense to check out what analysts think Hainan Meilan International Airport will earn in the future (free profit forecasts).

A Different Perspective

While the broader market lost about 19% in the twelve months, Hainan Meilan International Airport shareholders did even worse, losing 31%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 27% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Hainan Meilan International Airport better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Hainan Meilan International Airport you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

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