After reading AMVIG Holdings Limited's (HKG:2300) most recent earnings announcement (30 June 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether AMVIG Holdings's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
See our latest analysis for AMVIG Holdings
Despite a decline, did 2300 underperform the long-term trend and the industry?
2300's trailing twelve-month earnings (from 30 June 2019) of HK$290m has declined by -13% 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 -4.8%, indicating the rate at which 2300 is growing has slowed down. What could be happening here? Well, let's look at what's occurring with margins and whether the rest of the industry is experiencing the hit as well.
In terms of returns from investment, AMVIG Holdings has fallen short of achieving a 20% return on equity (ROE), recording 8.5% instead. Furthermore, its return on assets (ROA) of 5.5% is below the HK Packaging industry of 6.2%, indicating AMVIG Holdings's are utilized less efficiently. However, its return on capital (ROC), which also accounts for AMVIG Holdings’s debt level, has increased over the past 3 years from 7.9% to 10%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 44% to 37% over the past 5 years.
What does this mean?
Though AMVIG Holdings's past data is helpful, it is only one aspect of my investment thesis. Usually companies that face a prolonged period of diminishing earnings are going through some sort of reinvestment phase Though if the entire industry is struggling to grow over time, it may be a sign of a structural shift, which makes AMVIG Holdings and its peers a riskier investment. I suggest you continue to research AMVIG Holdings to get a more holistic view of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for 2300’s future growth? Take a look at our free research report of analyst consensus for 2300’s outlook.
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Financial Health: Are 2300’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.
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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.