Stock Analysis

Do Khind Holdings Berhad's (KLSE:KHIND) Earnings Warrant Your Attention?

KLSE:KHIND
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Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Khind Holdings Berhad (KLSE:KHIND). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Khind Holdings Berhad with the means to add long-term value to shareholders.

View our latest analysis for Khind Holdings Berhad

Khind Holdings Berhad's Improving Profits

Khind Holdings Berhad has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. Thus, it makes sense to focus on more recent growth rates, instead. Khind Holdings Berhad's EPS has risen over the last 12 months, growing from RM0.52 to RM0.58. This amounts to a 11% gain; a figure that shareholders will be pleased to see.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. EBIT margins for Khind Holdings Berhad remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 7.3% to RM576m. That's a real positive.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

earnings-and-revenue-history
KLSE:KHIND Earnings and Revenue History August 25th 2022

Khind Holdings Berhad isn't a huge company, given its market capitalisation of RM129m. That makes it extra important to check on its balance sheet strength.

Are Khind Holdings Berhad Insiders Aligned With All Shareholders?

Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So as you can imagine, the fact that Khind Holdings Berhad insiders own a significant number of shares certainly is appealing. Owning 40% of the company, insiders have plenty riding on the performance of the the share price. Those who are comforted by solid insider ownership like this should be happy, as it implies that those running the business are genuinely motivated to create shareholder value. Of course, Khind Holdings Berhad is a very small company, with a market cap of only RM129m. That means insiders only have RM52m worth of shares, despite the large proportional holding. That might not be a huge sum but it should be enough to keep insiders motivated!

Is Khind Holdings Berhad Worth Keeping An Eye On?

One positive for Khind Holdings Berhad is that it is growing EPS. That's nice to see. To add an extra spark to the fire, significant insider ownership in the company is another highlight. That combination is very appealing. So yes, we do think the stock is worth keeping an eye on. You should always think about risks though. Case in point, we've spotted 1 warning sign for Khind Holdings Berhad you should be aware of.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.

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

Valuation is complex, but we're here to simplify it.

Discover if Khind Holdings Berhad might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.