Is Now The Time To Put AppAsia Berhad (KLSE:APPASIA) On Your Watchlist?

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like AppAsia Berhad (KLSE:APPASIA). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide AppAsia Berhad with the means to add long-term value to shareholders.

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AppAsia Berhad's Improving Profits

AppAsia 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. As a result, we'll zoom in on growth over the last year, instead. AppAsia Berhad boosted its trailing twelve month EPS from RM0.0018 to RM0.0021, in the last year. There's little doubt shareholders would be happy with that 15% gain.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for AppAsia Berhad remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 33% to RM30m. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

View our latest analysis for AppAsia Berhad

AppAsia Berhad isn't a huge company, given its market capitalisation of RM151m. That makes it extra important to check on its balance sheet strength .

Are AppAsia 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 we're pleased to report that AppAsia Berhad insiders own a meaningful share of the business. Indeed, with a collective holding of 71%, company insiders are in control and have plenty of capital behind the venture. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. To give you an idea, the value of insiders' holdings in the business are valued at RM106m at the current share price. So there's plenty there to keep them focused!

Is AppAsia Berhad Worth Keeping An Eye On?

One positive for AppAsia Berhad is that it is growing EPS. That's nice to see. For those who are looking for a little more than this, the high level of insider ownership enhances our enthusiasm for this growth. These two factors are a huge highlight for the company which should be a strong contender your watchlists. Before you take the next step you should know about the 4 warning signs for AppAsia Berhad (2 shouldn't be ignored!) that we have uncovered.

Although AppAsia Berhad certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Malaysian companies that not only boast of strong growth but have strong insider backing.

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.