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Today I will take a look at Hang Lung Properties Limited's (HKG:101) most recent earnings update (31 December 2018) and compare these latest figures against its performance over the past few years, as well as how the rest of the real estate industry performed. As an investor, I find it beneficial to assess 101’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.

See our latest analysis for Hang Lung Properties

Commentary On 101's Past Performance

101's trailing twelve-month earnings (from 31 December 2018) of HK$8.1b has declined by -0.6% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of -2.5%, indicating the rate at which 101 is growing has slowed down. What could be happening here? Let's examine what's going on with margins and whether the rest of the industry is facing the same headwind.

In terms of returns from investment, Hang Lung Properties has fallen short of achieving a 20% return on equity (ROE), recording 6.0% instead. However, its return on assets (ROA) of 4.6% exceeds the HK Real Estate industry of 3.3%, indicating Hang Lung Properties has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Hang Lung Properties’s debt level, has increased over the past 3 years from 3.5% to 3.5%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 27% to 19% over the past 5 years.

What does this mean?

Though Hang Lung Properties's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. You should continue to research Hang Lung Properties to get a more holistic view of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for 101’s future growth? Take a look at our free research report of analyst consensus for 101’s outlook.

2. Financial Health: Are 101’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.