After looking at China Hanya Group Holdings Limited’s (SEHK:8312) latest earnings announcement (30 September 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. View our latest analysis for China Hanya Group Holdings

Did 8312 perform worse than its track record and industry?

I look at data from the most recent 12 months, 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 method enables me to analyze various companies in a uniform manner using the latest information. For China Hanya Group Holdings, its latest trailing-twelve-month earnings is -HK$22.4M, which, against the prior year’s level, has become more negative. Since these values are relatively myopic, I’ve created an annualized five-year figure for China Hanya Group Holdings’s net income, which stands at -HK$6.5M. This doesn’t seem to paint a better picture, since earnings seem to have consistently been getting more and more negative over time.

We can further examine China Hanya Group Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years China Hanya Group Holdings has seen an annual decline in revenue of -28.60%, 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 retail distributors industry has been growing its average earnings by double-digit 40.27% in the previous year, . This is a change from a volatile drop of -9.28% in the last couple of years. This suggests that whatever tailwind the industry is enjoying, China Hanya Group Holdings has not been able to reap as much as its industry peers.

What does this mean?

China Hanya Group Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will happen in the future and when. The most valuable step is to examine company-specific issues China Hanya Group Holdings may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research China Hanya Group Holdings to get a better picture of the stock by looking at: