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When China State Construction International Holdings Limited (HKG:3311) released its most recent earnings update (30 June 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how China State Construction International Holdings performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see 3311 has performed.
View our latest analysis for China State Construction International Holdings
Were 3311’s earnings stronger than its past performances and the industry?
3311’s trailing twelve-month earnings (from 30 June 2018) of HK$5.5b has increased by 2.8% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 17%, indicating the rate at which 3311 is growing has slowed down. What could be happening here? Well, let’s take a look at what’s occurring with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, China State Construction International Holdings has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. Furthermore, its return on assets (ROA) of 5.1% is below the HK Construction industry of 5.8%, indicating China State Construction International Holdings’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for China State Construction International Holdings’s debt level, has declined over the past 3 years from 11% to 8.6%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research China State Construction International Holdings to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for 3311’s future growth? Take a look at our free research report of analyst consensus for 3311’s outlook.
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Financial Health: Are 3311’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.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.