Today I will take a look at Kingston Financial Group Limited’s (SEHK:1031) most recent earnings update (30 September 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the capital markets industry performed. As an investor, I find it beneficial to assess 1031’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for Kingston Financial Group
How 1031 fared against its long-term earnings performance and its industry
I like to use data from the most recent 12 months, 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 technique enables me to analyze various companies on a more comparable basis, using new information. For Kingston Financial Group, its latest earnings (trailing twelve month) is HK$1.65B, which, against the prior year’s level, has grown by a somewhat soft 8.41%. Given that these values may be somewhat short-term, I have created an annualized five-year figure for Kingston Financial Group’s net income, which stands at HK$1.04B This means on average, Kingston Financial Group has been able to steadily raise its earnings over the last couple of years as well.
How has it been able to do this? Well, let’s take a look at whether it is solely due to industry tailwinds, or if Kingston Financial Group has seen some company-specific growth. In the past few years, Kingston Financial Group grew its bottom line faster than revenue by efficiently controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the HK capital markets industry has been growing, albeit, at a subdued single-digit rate of 7.83% in the previous twelve months, and a substantial 14.15% over the previous five years. This shows that whatever tailwind the industry is deriving benefit from, Kingston Financial Group is able to leverage this to its advantage.
What does this mean?
Kingston Financial Group’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Kingston Financial Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Kingston Financial Group to get a more holistic view of the stock by looking at: