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Measuring Baofeng Modern International Holdings Company Limited’s (SEHK:1121) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess 1121’s recent performance announced on 31 December 2017 and weigh these figures against its long-term trend and industry movements. See our latest analysis for Baofeng Modern International Holdings
Did 1121 perform worse than its track record and industry?
I prefer to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique enables me to analyze many different companies on a similar basis, using the latest information. For Baofeng Modern International Holdings, its most recent bottom-line (trailing twelve month) is -CN¥435.37M, which, relative to last year’s figure, has become more negative. Since these values are somewhat short-term, I have computed an annualized five-year value for Baofeng Modern International Holdings’s net income, which stands at -CN¥27.68M. This doesn’t look much better, since earnings seem to have steadily been getting more and more negative over time.
We can further examine Baofeng Modern International Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Baofeng Modern International Holdings has seen an annual decline in revenue of -36.20%, on average. This adverse movement is a driver of the company’s inability to reach breakeven. Has the entire industry experienced this headwind? Viewing growth from a sector-level, the HK luxury industry has been growing its average earnings by double-digit 12.73% over the past twelve months, . This is a turnaround from a volatile drop of -3.95% in the past couple of years. This shows that whatever uplift the industry is enjoying, Baofeng Modern International Holdings has not been able to realize the gains unlike its average peer.
What does this mean?
Though Baofeng Modern International Holdings’s past data is helpful, it is only one aspect of my investment thesis. With companies that are currently loss-making, it is always difficult to forecast what will occur going forward, and when. The most useful step is to examine company-specific issues Baofeng Modern International Holdings may be facing and whether management guidance has consistently been met in the past. You should continue to research Baofeng Modern International Holdings to get a more holistic view of the stock by looking at: