Today I will examine Asia Investment Finance Group Limited’s (SEHK:33) latest earnings update (30 June 2017) and compare these figures against its performance over the past couple of years, in addition to how the rest of 33’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time. See our latest analysis for Asia Investment Finance Group

Did 33 perform worse than its track record and industry?

I look at 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 blend enables me to assess various companies on a similar basis, using the most relevant data points. For Asia Investment Finance Group, its most recent trailing-twelve-month earnings is -HK$121.1M, which, against last year’s figure, has become more negative. Since these figures may be relatively myopic, I have estimated an annualized five-year figure for Asia Investment Finance Group’s net income, which stands at -HK$558.6M. This means that, despite the fact that net income is negative, it has become less negative over the years.

Additionally, we can evaluate Asia Investment Finance Group’s loss by looking at what’s going on in the industry as well as within the company. Initially, I want to briefly look into the line items. Revenue growth over the past couple of years has been negative at -33.40%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Scanning growth from a sector-level, the HK retail distributors industry has been growing its average earnings by double-digit 11.70% in the prior year, . This is a change from a volatile drop of -2.20% in the past couple of years. This means any tailwind the industry is enjoying, Asia Investment Finance Group has not been able to reap as much as its average peer.

What does this mean?

While past data is useful, it doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to predict what will occur going forward, and when. The most insightful step is to examine company-specific issues Asia Investment Finance Group may be facing and whether management guidance has regularly been met in the past. I recommend you continue to research Asia Investment Finance Group to get a more holistic view of the stock by looking at:

1. Financial Health: Is 33’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.

2. 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 2017. This may not be consistent with full year annual report figures.
To help readers see pass 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.