In This Article:
When Hengdeli Holdings Limited’s (SEHK:3389) announced its latest earnings (31 December 2017), I wanted to understand how these figures stacked up against its past performance. The two benchmarks I used were Hengdeli Holdings’s average earnings over the past couple of years, and its industry performance. These are useful yardsticks to help me gauge whether or not 3389 actually performed well. Below is a quick commentary on how I see 3389 has performed. Check out our latest analysis for Hengdeli Holdings
Commentary On 3389’s Past Performance
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 method enables me to analyze different stocks on a similar basis, using the latest information. For Hengdeli Holdings, its latest earnings (trailing twelve month) is -CN¥52.80M, which compared to the prior year’s figure, has become less negative. Given that these figures may be relatively short-term, I have computed an annualized five-year value for Hengdeli Holdings’s net income, which stands at CN¥410.41M.
We can further examine Hengdeli Holdings’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years Hengdeli Holdings has seen an annual decline in revenue of -8.04%, 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 specialty retail industry has been growing its average earnings by double-digit 17.21% over the past year, . This is a turnaround from a volatile drop of -2.43% in the last couple of years. This suggests that, while Hengdeli Holdings is currently loss-making, it may have only just gained from the recent industry expansion, moving earnings in the right direction.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that incur net loss is always hard to envisage what will occur going forward, and when. The most insightful step is to assess company-specific issues Hengdeli Holdings may be facing and whether management guidance has dependably been met in the past. You should continue to research Hengdeli Holdings to get a better picture of the stock by looking at:
-
Future Outlook: What are well-informed industry analysts predicting for 3389’s future growth? Take a look at our free research report of analyst consensus for 3389’s outlook.
-
Financial Health: Is 3389’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.
-
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 31 December 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.