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After looking at China Environmental Technology and Bioenergy Holdings Limited’s (SEHK:1237) latest earnings announcement (30 June 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. 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 China Environmental Technology and Bioenergy 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 China Environmental Technology and Bioenergy Holdings
Could 1237 beat the long-term trend and outperform its industry?
I use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to analyze different companies on a more comparable basis, using the latest information. For China Environmental Technology and Bioenergy Holdings, its most recent earnings (trailing twelve month) is -CN¥22.00M, which compared to the prior year’s figure, has become less negative. Since these figures are relatively nearsighted, I’ve estimated an annualized five-year value for China Environmental Technology and Bioenergy Holdings’s earnings, which stands at CN¥62.56M.
We can further examine China Environmental Technology and Bioenergy 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 China Environmental Technology and Bioenergy Holdings’s top-line has grown by a mere 6.81%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Looking at growth from a sector-level, the HK leisure industry has been growing its average earnings by double-digit 27.98% over the prior twelve months, and a less exciting 2.35% over the past five years. This means any uplift the industry is profiting from, China Environmental Technology and Bioenergy Holdings has not been able to leverage it as much as its industry peers.
What does this mean?
China Environmental Technology and Bioenergy 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 hard to envisage what will happen in the future and when. The most insightful step is to examine company-specific issues China Environmental Technology and Bioenergy Holdings may be facing and whether management guidance has consistently been met in the past. I recommend you continue to research China Environmental Technology and Bioenergy Holdings to get a better picture of the stock by looking at: