After reading JTF International Holdings Limited’s (SEHK:8479) latest earnings update (31 March 2018), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether 8479 has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways. Check out our latest analysis for JTF International Holdings
Were 8479’s earnings stronger than its past performances and the industry?
To account for any quarterly or half-yearly updates, I use data from the most recent 12 months, 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 allows me to assess various companies on a more comparable basis, using the latest information. For JTF International Holdings, its most recent earnings (trailing twelve month) is CN¥19.99M, which, against the prior year’s level, has jumped up by 22.99%. Since these figures may be fairly short-term thinking, I’ve computed an annualized five-year figure for JTF International Holdings’s net income, which stands at CN¥13.75M This shows that, on average, JTF International Holdings has been able to gradually improve its profits over the past couple of years as well.
What’s the driver of this growth? Let’s take a look at whether it is only attributable to an industry uplift, or if JTF International Holdings has experienced some company-specific growth. The rise in earnings seems to be propelled by a solid top-line increase outstripping its growth rate of expenses. Though this resulted in a margin contraction, it has made JTF International Holdings more profitable. Looking at growth from a sector-level, the HK oil and gas industry has been growing its average earnings by double-digit 35.00% over the previous year, and a more muted 8.92% over the past five years. This means any uplift the industry is deriving benefit from, JTF International Holdings has not been able to realize the gains unlike its average peer.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While JTF International Holdings has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research JTF International Holdings to get a better picture of the stock by looking at: