Here's Why We Think C.I. Holdings Berhad (KLSE:CIHLDG) Is Well Worth Watching
Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.'
In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like C.I. Holdings Berhad (KLSE:CIHLDG). Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.
View our latest analysis for C.I. Holdings Berhad
How Quickly Is C.I. Holdings Berhad Increasing Earnings Per Share?
As one of my mentors once told me, share price follows earnings per share (EPS). That makes EPS growth an attractive quality for any company. As a tree reaches steadily for the sky, C.I. Holdings Berhad's EPS has grown 31% each year, compound, over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be smiling.
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. C.I. Holdings Berhad maintained stable EBIT margins over the last year, all while growing revenue 22% to RM3.1b. That's a real positive.
You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.
C.I. Holdings Berhad isn't a huge company, given its market capitalization of RM518m. That makes it extra important to check on its balance sheet strength.
Are C.I. Holdings Berhad Insiders Aligned With All Shareholders?
Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So as you can imagine, the fact that C.I. Holdings Berhad insiders own a significant number of shares certainly appeals to me. Indeed, with a collective holding of 63%, company insiders are in control and have plenty of capital behind the venture. This makes me think they will be incentivised to plan for the long term - something I like to see. In terms of absolute value, insiders have RM324m invested in the business, using the current share price. That should be more than enough to keep them focussed on creating shareholder value!
Does C.I. Holdings Berhad Deserve A Spot On Your Watchlist?
For growth investors like me, C.I. Holdings Berhad's raw rate of earnings growth is a beacon in the night. I think that EPS growth is something to boast of, and it doesn't surprise me that insiders are holding on to a considerable chunk of shares. So this is very likely the kind of business that I like to spend time researching, with a view to discerning its true value. You still need to take note of risks, for example - C.I. Holdings Berhad has 3 warning signs we think you should be aware of.
You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.
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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About KLSE:CIHLDG
C.I. Holdings Berhad
An investment holding company, engages in manufacturing, selling, and packing various types of edible oils in Malaysia, Africa, Asia, and internationally.
Flawless balance sheet, good value and pays a dividend.