After reading Asian Capital Resources (Holdings) Limited’s (SEHK:8025) most recent earnings announcement (30 September 2017), 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 Asian Capital Resources (Holdings)’s performance has been impacted by industry movements. In this article I briefly touch on my key findings. View our latest analysis for Asian Capital Resources (Holdings)
Was 8025’s weak performance lately a part of a long-term decline?
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 examine various companies in a uniform manner using new information. For Asian Capital Resources (Holdings), its most recent earnings (trailing twelve month) is -HK$5.38M, which compared to the prior year’s level, has become more negative. Given that these figures may be relatively nearsighted, I’ve computed an annualized five-year figure for Asian Capital Resources (Holdings)’s net income, which stands at -HK$12.25M. This means though net income is negative, it has become less negative over the years.
We can further analyze Asian Capital Resources (Holdings)’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past half a decade Asian Capital Resources (Holdings)’s top-line has risen by a mere 6.50%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Eyeballing growth from a sector-level, the HK capital markets industry has been growing, albeit, at a muted single-digit rate of 4.46% in the prior year, and a substantial 14.31% over the previous five years. This means that any near-term headwind the industry is facing, it’s hitting Asian Capital Resources (Holdings) harder than its peers.
What does this mean?
Asian Capital Resources (Holdings)’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always difficult to predict what will happen in the future and when. The most useful step is to examine company-specific issues Asian Capital Resources (Holdings) may be facing and whether management guidance has regularly been met in the past. You should continue to research Asian Capital Resources (Holdings) to get a better picture of the stock by looking at: