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Measuring Newtree Group Holdings Limited’s (SEHK:1323) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess 1323’s recent performance announced on 30 September 2017 and compare these figures to its historical trend and industry movements. View our latest analysis for Newtree Group Holdings
Were 1323’s earnings stronger than its past performances and the industry?
I look at data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to assess many different companies on a more comparable basis, using the most relevant data points. For Newtree Group Holdings, its most recent earnings (trailing twelve month) is -HK$41.51M, which, relative to the prior year’s figure, has become less negative. Given that these values are fairly nearsighted, I’ve estimated an annualized five-year value for Newtree Group Holdings’s net income, which stands at -HK$113.06M. This shows that, even though net income is negative, it has become less negative over the years.
We can further assess Newtree Group Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the last five years Newtree Group Holdings has seen an annual decline in revenue of -12.17%, 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 medical equipment industry has been growing its average earnings by double-digit 18.29% in the past twelve months, and a less exciting 9.50% over the previous five years. This means that, despite the fact that Newtree Group Holdings is currently running a loss, it may have gained from industry tailwinds, moving earnings into a more favorable position.
What does this mean?
Though Newtree Group 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 happen in the future and when. The most useful step is to examine company-specific issues Newtree Group Holdings may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Newtree Group Holdings to get a more holistic view of the stock by looking at: