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After reading Billion Industrial Holdings Limited's (SEHK:2299) most recent earnings announcement (30 June 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long term investor, I pay close attention to earnings trend, rather than the figures published at one point in time. I also compare against an industry benchmark to check whether Billion Industrial Holdings's performance has been impacted by industry movements. In this article I briefly touch on my key findings.
Check out our latest analysis for Billion Industrial Holdings
How Well Did 2299 Perform?
2299's trailing twelve-month earnings (from 30 June 2019) of CN¥830m has jumped 29% 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 34%, indicating the rate at which 2299 is growing has slowed down. Why could this be happening? Well, let's look at what's transpiring with margins and if the entire industry is feeling the heat.
In terms of returns from investment, Billion Industrial Holdings has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 7.2% exceeds the HK Luxury industry of 5.1%, indicating Billion Industrial Holdings has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Billion Industrial Holdings’s debt level, has increased over the past 3 years from 5.7% to 17%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 50% to 28% over the past 5 years.
What does this mean?
Though Billion Industrial Holdings's past data is helpful, it is only one aspect of my investment thesis. While Billion Industrial Holdings has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research Billion Industrial Holdings to get a more holistic view of the stock by looking at:
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Financial Health: Are 2299’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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Valuation: What is 2299 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 2299 is currently mispriced by the market.
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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.